PERU NEWS

The ratings agency Fitch Ratings raised Peru's long term debt in foreign currency rating from BB+ (speculative) to BBB- (stable) thereby granting Investment Grade. Peru becomes only the third country in Latin America to achieve this feat (the other two are Mexico and Chile). Fitch's director for Latin America, Theresa Paiz, cited good management of Peru's internal and external accounts and positive changes in its economic structure as the main reasons for the upgrade. The rating means Peru is in capacity to cover the whole of its debts and that foreign investments are secure.

Peru is expected to lead Latin American growth in 2008. Economic and Finance Minister Luis Carranza predicted growth would be 7%, surpassing the 6.2% prediction made at the beginning of the year, as the economy expanded 10.1% in January and 9% in the first trimester. The positive forecast builds on the latest brief by the Latin Focus Consensus Forecast, which compiles projections from leading investment and financial banks and which expects Peru to lead growth in the region, followed by Argentina and Venezuela.

Growth has been underpinned by strong internal demand which has fuelled expansion of the construction (21%), retail (13%) and manufacturing (10%) sectors. According to the vice-president of the National Society of Industries (SNI), the manufacturing sector is expected to benefit from a fresh surge in investment, which could reach US$ 8 billion in 2008 as many businesses aim to expand or consolidate their output this year. Investment in 2007 was just over US$ 5.3 billion.

Minister Carranza stated GDP per capita would be US$ 4,466 in 2008 and predicted it should reach US$ 5,263 by 2011. He also stated that 900,000 new jobs have been created under the current government. The Ministry of Employment added that job creation has been underpinned by growth of the formal sector of employment, which grew 8.8% in January in businesses with a workforce of 10 or more people. The sectors that concentrated the majority of new jobs were trade (13.9%), services (8.2%), industry (8.1%) and transport, storage and communications (7.5%).