Peru s fundamentals and economic outlook Julio Velarde Governor Central Bank of Peru. March 2015

Transcription

1 Peru s fundamentals and economic outlook Julio Velarde Governor Central Bank of Peru March 2015

2 Agenda 1. Peru s growth is based on strong fundamentals 2. Recent economic developments and prospects 3. Policy Framework 2

3 Peru s performance in the last 9 years Average GDP growth: Average inflation: Qatar 13,6 Poland 2,5 China 9,8 Malaysia 2,6 Nigeria 7,6 Thailand 2,7 India 7,1 Peru 3,0 Peru 6,3 China 3,1 Kazakhstan 6,1 Chile 3,5 Indonesia 5,8 Colombia 3,8 Saudi Arabia 5,8 United Arab Emirates 4,0 Philippines 5,4 Mexico 4,2 Malaysia 4,9 Philippines 4,3 3

4 Peru was the country with the fastest recovery and highest growth in the region after the financial crisis GDP of selected countries ( ) (Index 2007=100) Peru Colombia Chile Brazil Mexico Average GDP Growth Brazil 2,8 Colombia 4,8 Chile 4,6 Mexico 3,3 Peru 5,8 Average LATAM 3, Source: WEO (October 2014) and BCRP. 8

5 The current account deficit is financed by long-term private capital inflows CURRENT ACCOUNT AND LONG-TERM EXTERNAL FINANCING OF THE PRIVATE SECTOR: / (Percentage of GDP) 10,4 8,3 7,0 9,3 7,2 10,8 9,5 6,9 1,6 4,5 3,3 4,9 1,5-4,3-0,5-2,4-1,9-3,3-4,5-4, Current Account Long-term financing of the private sector 1/ Includes net foreign investment, portfolio investment and private sector's long-term disbursement. 5

6 International reserves are equivalent to 31 percent of GDP 30,5 International Reserves (% GDP, 2014) International Reserves: (% GDP) 16,7 15,3 14,9 11,9 Peru Brazil Chile Mexico Colombia Source: BCRP, Bloomberg y FMI (WEO)

7 Banking system has a low exposure to external liabilities 9,5 Short Term External Liabilities of the Banking Sector (% of Credit) 7,0 6,6 5,3 4,0 3,9 2,6 3,2 2,7 3,

8 Dollarization dropped 40 percent since 2005 Dollarization Ratio of Credit to the Private Sector

9 Greater financial deepening: Credit to GDP almost doubled since 2005 Credit to the private sector (as percentage of GDP) 36,7 33,4 27,6 26,9 29,0 31,1 23,7 19,3 18,7 20,

10 Fiscal surplus has allowed to accumulate important resources during the period of high commodity prices Non-Financial Public Sector Balance (percentage of GDP) 3,1 2,5 2,5 2,0 2,3 0,9-0,4-0,2-0,1-1,

11 Gross non-financial public sector debt has shown a downward trend in the last 10 years NON FINANCIAL PUBLIC SECTOR DEBT STOCK: GROSS AND NET DEBT (percentage of GDP) 41,7 33,3 33,9 29,9 25,1 18,0 26,9 27,2 24,3 22,1 20,4 19,6 20,1 14,1 14,3 12,2 8,6 5,0 3,7 3, Gross Debt Net Debt 11

12 Public debt is among the lowest in the region Gross public debt: 2014 (% GDP) 65,8 56,6 54,8 48,0 47,9 36,3 35,4 34,0 26,2 19,3 13,9 Brazil Malaysia Vietnam Mexico Thailand Philippines Korea Colombia Indonesia Peru Chile Source: FMI (WEO). 12

13 Productivity improvements are expected to have a positive impact on potential output growth in the following years 9,0 Potential GDP (Percentage var.) 8,0 7,0 6,0 5,0 4,6 5,5 6,3 6,9 7,0 6,8 6,5 6,2 5,9 5,5 5,1 4,9 4,0 3,6 3,0 2,0 1,0 0,

14 Continuous increase in employment rates, even during the financial crisis Urban Employment 1/ ( Percentage change) / Enterprises with 10 or more workers Source: Ministry of Labor and Promotion of Employment 14

15 Gross fixed investment Total investment (as percentage of GDP) 22,2 17,0 21,9 25,0 20,0 Gross fixed investment (as percentage of GDP) Chile Brazil Mexico Colombia Latin America Source: FMI (WEO). 17,3 18,2 20,3 23,9 23,3 25,1 24,0 25,8 26,6 25, Private investment Public Investment % GDP Private 14,3 15,0 16,8 19,4 17,6 19,2 19,2 20,4 20,8 20,3 Public 3,1 3,2 3,5 4,5 5,7 5,9 4,8 5,4 5,8 5,5

16 Copper production would increase 70 percent in 2018 COPPER PRODUCTION (million of tons) Toquepala (Tacna) Constancia (Cusco) Las Bambas (Apurímac) Cerro Verde (Arequipa) 2,3 2,4 1,8 1,3 1,3 1, * 2016* 2017* 2018* * Forecast 16

17 Agenda 1. Peru s growth is based on strong fundamentals 2. Recent economic developments and prospects 3. Policy Framework 17

18 Lower GDP growth due to negative supply schocks that affected primary sectors GDP: (percentage variation and contribution) 7,0 6,0 5,8-1,6 5,0 4,0-0,5-1,4 +1,4 +0,1 +0,5 - +0,9 4,4-4,8 3,0 2,4 2,0 1,0 0,0 GDP % Var 2013 Primary GDP Construction Others GDP % Var 2014 Primary GDP Construction Others GDP % Var

19 Negative shocks affected economic growth in 2014 Gross Domestic Product (yoy % var) 2013 Forecast Dic I. Supply shocks Rice 0,1 2,7-5,6 Anchovies 28,7 21,2-52,6 Fishmeal 44,3 37,5-63,0 Gold -3,3 1,4-10,4 Copper 7,4 17,3 0,7 Zinc 5,4 4,8-2,4 II. Demand shocks Construction 8,9 7,3 1,7 Inventories 1,3-0,1-0,6 III. GDP 5,8 6,0 2,4 Primary GDP 5,0 5,2-2,3 Non-Primary GDP 6,0 6,1 3,6 15

20 Economic recovery in 2015 would be based on mining, manufacturing and construction GDP BY ECONOMIC SECTOR (yoy % var) * 2016* Primary GDP -2,3 4,7 8,1 Agriculture 1,4 1,8 3,5 Fishing -27,9 17,2 18,6 Mining and oil -0,8 5,2 10,6 Manufacturing based on raw materials -9,7 6,3 4,5 Non-primary GDP 3,6 4,5 5,5 Non-primary manufacturing -1,0 2,6 4,5 Construction 1,7 3,7 7,0 Electricity and water 4,9 5,1 6,1 Commerce and services 4,8 4,9 5,5 GDP 2,4 4,4-4,8 5,5-6,0 *Forecast 20

21 Lower GDP growth in 2014 due to a reduction in private and public investment. GDP: (percentage variation and contribution) 7,0 6,0 5,8-1,8 5,0 4,0-1,9 +0,5-0,2 +1,1 - +1,5 4,4-4,8 3,0 2,0-0,9 +1,2 2,4 +0,7 1,0 0,0 GDP % Var 2013 Private Investment Inventories Public Investment Others Var. % PBI 2014 Private Investment Public Investment Net Exports Others Var. % PBI

22 Institutional and internal factors have restrained investment and have affected investor confidence 100,0 Terms of Trade, Investment and Investor Confidence Index 80,0 Investor Confidence Index (centered at 50) 60,0 40,0 Private investment (% var) 20,0 0,0-20,0 Terms of trade (% var) Investment Terms of Trade Investor Confidence Index 22

23 Negative effect on investment due to lower regional and local government spending Gross capital formation (Real % var.) Gross capital formation 15,6 10,0-1, National government -16,5 11,0 18,1 Regional governments 38,2 4,5-17, Local governments 39,8 12,3-5,

24 T.11 2T.11 3T.11 4T.11 1T.12 2T.12 3T.12 4T.12 1T.13 2T.13 3T.13 4T.13 1T.14 2T.14 3T.14 4T.14 Compared to the average price of 2012, export prices dropped 12,4 percent in However, they still remain above the 10-year average Prices Cummulative percentage variation Copper US$/lb Gold US$/oz.tr Silver US$/oz.tr Zinc US$/lb EXPORT PRICE INDEX (2007=100) Average 2012: Average 2014: Average ( ):

25 Higher GDP growth in 2015 would be associated with a recovery of private investment and exports. Gross Domestic Product (Real % change) * 2016* Private spending 1,8 3,9 5,0 Private consumption 4,1 4,4 4,8 Private fixed investment -1,6 1,6 5,1 Public spending 3,0 6,0 8,2 public consumption 6,4 5,7 6,1 Public investment -3,6 6,5 12,6 Exports -0,3 3,0 3,0 Imports -1,4 2,1 6,0 GDP 2,4 4,4-4,8 5,5-6,0 *Forecast 25

26 Peru s growth expectation is one of the highest in the region, whereas inflation is expected to be the lowest GDP: 2015 (yoy % var) Inflation: 2015 (percentage) Bolivia 4,6 Peru 2,7 Peru 4,4 Chile 2,7 Paraguay 4,2 Mexico 3,2 Colombia 3,7 Colombia 3,3 Uruguay 3,3 Ecuador 3,5 Mexico 3,0 Paraguay 3,8 Ecuador 2,7 Bolivia 5,3 Chile 2,7 Brazil 7,0 Brazil -0,3 Uruguay 7,5 Argentina -0,3 Argentina 22,6 Venezuela -5,3 Venezuela 93,9 Source: Latin American Consensus Forecast (February 2015). 22

27 J.11 F M A M J J A S O N D J.12 F M A M J J A S O N D J.13 F M A M J J A S O N D J.14 F M A M J J A S O N D Investor confidence also remains in the optimistic region. 80 Investor Confidence Source: Apoyo Consultoría 24

28 Recovery in currency growth rates due to higher purchases of mass consumption products and smaller firms 20,0 Currency in Circulation (YoY % Var.) 18,0 16,0 14,0 12,0 10,0 8,0 10,1 9,4 8,8 9,0 7,5 7,4 7,6 8,4 11,3 10,4 9,9 10,7 11,7 6,0 4,0 2,0 0,0 28

29 Production of electricity showed a steady growth rate throughout the year 9,0 Production of Electricity: (YoY % var.) 8,0 7,0 6,0 5, ,0 4, ,0 2,0 1,0 0,0 J.12 F M A M J J A S O N D J.13 F M A M J J A S O N D J.14 F M A M J J A S O N D J.15* F M* * Preliminary Source: COES 29

30 Announced private investment projects amount to US$ 67.6 billion PRIVATE INVESTMENT PROJECT STOCK (Billion of US$) CONCESSIONS (Million of US$) Set Set Set

31 The onset of new mining projects will contribute to improve in the trade balance in the coming years 0,3 Trade Balance: (Billion of US$) CURRENT ACCOUNT AND LONG-TERM EXTERNAL FINANCING OF THE PRIVATE SECTOR: / (Percentage of GDP) 9,5 6,9 5,8 5,0-0,9 *Forecast -1,5-1, * 2016* -4,5-4,1-3,7-3, * 2016* Current Account Long-term financing of the private sector 1/ Includes net foreign investment, portfolio investment and private sector's long-term disbursement. *Forecast 31

32 Non-Financial Public Sector Balance and Gross non-financial public sector debt Non-Financial Public Sector Balance (percentage of GDP) GROSS NON-FINANCIAL PUBLIC SECTOR DEBT STOCK (percentage of GDP) 0,9 19,7 19,6 19,6-0,1 19,3-2,0-2, * 2016* * Forecast * 2016* * Forecast 32

33 Agenda 1. Peru s growth is based on strong fundamentals 2. Recent economic developments and prospects 3. Policy Framework 33

34 The Central Bank of Peru lowered its monetary policy interest rate 4 times since November 2013 Monetary policy and real interest rate (As Percentage) % % 34

35 ene-09 mar-09 may-09 jul-09 sep-09 nov-09 ene-10 mar-10 may-10 jul-10 sep-10 nov-10 ene-11 mar-11 may-11 jul-11 sep-11 nov-11 ene-12 mar-12 may-12 jul-12 sep-12 nov-12 ene-13 mar-13 may-13 jul-13 sep-13 nov-13 ene-14 mar-14 may-14 jul-14 sep-14 nov-14 ene-15 mar-15** Macro-prudential measures aim at securing sustainable credit growth and contributing to de-dollarization % 35,0 30,0 25,0 Domestic currency reserve requirement rate (As percentage Tasa of total de encaje obligations en moneda subject to nacional reserve requirements) Encaje Marginal en MN Encaje Medio en MN (Como porcentaje de las obligaciones sujetas al encaje) 20,0 16,0 15,0 10,0 8,0 5,0 0,0 ** Proyectado Marginal rate Average rate Liquidity injection by reducing the rate of reserve requirements in domestic currency (Millions of S/.) Month Liquidity Jun Aug Sep Oct Dec Jan Feb Mar Apr Jul Sep Oct Nov Dec Jan Feb Mar Total

36 ene-09 mar-09 may-09 jul-09 sep-09 nov-09 ene-10 mar-10 may-10 jul-10 sep-10 nov-10 ene-11 mar-11 may-11 jul-11 sep-11 nov-11 ene-12 mar-12 may-12 jul-12 sep-12 nov-12 ene-13 mar-13 may-13 jul-13 sep-13 nov-13 ene-14 mar-14 may-14 jul-14 sep-14 nov-14 ene-15 mar-15** Macro-prudential measures aim at securing sustainable credit growth and contributing to de-dollarization % 80,0 70,0 Foreign currency reserve requirement rate (As (Como percentage porcentaje of total de las obligations obligaciones subject sujetas to al reserve encaje) requirements) Encaje Marginal Marginal rate en ME Tasa de encaje en moneda extranjera 70,0 60,0 Encaje Average Medio rateen ME 60,0 50,0 50,0 40,0 45,4 30,0 20,0 10,0 0,0 ** Proyectado 36

37 Higher preference for credit in domestic currency since the second quarter of 2013 Credit to the private sector (yoy % var) Credit growth rates Jan.15 / Jan.14 Domestic Currency Foreign Currency Dollarization (%) Domestic Currency December 2013 January Foreign Currency Total Credit to enterprises Credit to households a.consumer loans Car loans Credit cards Other loans b. Mortgage loans Total ,0 25,0 Soles Dollars Total CREDIT TO THE PRIVATE SECTOR (YoY % var) 20,0 18,5 15,0 10,0 10,4 5,0 0,0-5,0-0,7 37

38 fev/11 abr/11 jun/11 ago/11 out/11 dez/11 fev/12 abr/12 jun/12 ago/12 out/12 dez/12 fev/13 abr/13 jun/13 ago/13 out/13 dez/13 fev/14 abr/14 jun/14 ago/14 out/14 dez/14 Long term interest rates are consistent with recent developments in the world economy and with macroeconomic fundamentals. Yield (%) Mar.15 - Dec. 13 Country Dec. 13 Mar.15 (in bps) Policy Rate Brazil ,21 13, ,25 Colombia ,79 6, ,50 Mexico ,53 6, ,00 Peru ,60 5,55-5 3,25 Yield (%) 13,8 10 year Sovereign Bond Yield 12,8 Brazil 11,8 10,8 9,8 8,8 Tapering announcement Tapering begins 7,8 6,8 5,8 4,8 Colombia Mexico Peru 3,8 Source: Bloomberg 38

39 Non-resident agents have reduced their holdings of domestic bonds, but bond yields have not increased 39

40 Inflation returned to the inflation target range in February 7 Inflation: February 2015 (YoY % var.) INFLATION AND INFLATION TARGET (yoy % var) Average inflation Inflation 2.77 Inflation excluding food and energy 2.45 Inflation 2.6 Inflation excluding food and energy Inflation Inflation excluding food and energy Maximum Inflation target range Minimum feb-11 jun-11 oct-11 feb-12 jun-12 oct-12 feb-13 jun-13 oct-13 feb-14 jun-14 oct-14 feb-15 40

41 Peru s fundamentals and economic outlook Julio Velarde Governor Central Bank of Peru March 2015