Julio Velarde Governor Central Bank of Peru20InPeru%20Asia%20%20set%202015%20%E2... · 2015. 9....
Transcript of Julio Velarde Governor Central Bank of Peru20InPeru%20Asia%20%20set%202015%20%E2... · 2015. 9....
Peru’s fundamentals and economic outlookJulio Velarde
Governor
Central Bank of Peru
September 2015
1. Peru’s growth is based on strong fundamentals
2. Recent economic developments and prospects
3. Policy Framework
4. Concluding Remarks
Agenda
2
7.4 7.3
6.5
5.95.5 5.4 5.2
4.5 4.4
3.7 3.63.1 3.1
2.5 2.3 2.3 2.1 2.0 1.91.5
0.6 0.60.1
Average GDP growth: 2005-2014
Average GDP growth is among the highest in emerging economies
Source: IMF, World Economic Outlook
3
After the 2008-2009 financial crisis, Peru was the country with the fastest recovery and highest growth among the main Latin American ITers
90
100
110
120
130
140
150
2007 2008 2009 2010 2011 2012 2013 2014
GDP of selected countries (2007-2014)(Index 2007=100)
Source: IMF and BCRP.
Peru
Colombia
Mexico
Brazil
Chile
Average GDP
Growth
2010-2014
Brazil 2,8
Colombia 4,8
Chile 4,6
Mexico 3,3
Peru 5,8
Average LATAM 3,5
4
5.4
4.1 4.03.6
2.9
2.1
Brazil Mexico Colombia Chile Peru Peru (excludes food andenergy)
Average Inflation: 2005-2014
Average Inflation is the lowest among main Latin American economies
Source: IMF, World Economic Outlook
5
Peruvian Credit rating of sovereign debt is BBB+ since 2013
Source: Standard & Poors
AA AA- A+ A- BBB+ BBB BBB- BB+ B-
Long term sovereign debt in foreign currency
Colombia
Philippines*
Brazil
India
South Africa
Hungary
Indonesia*
Russia
Turkey
Egypt
Investment grade: BBB-
China*
Czech Republic
Qatar
Taiwan* Chile
South Korea* Malaysia*
PolandPeru
Mexico
* Asia - Pacific
6
80
43
3532
29 28 28 27 26
20 19 18 18 17 16 15 15 15 13 12 127
2
Ta
iwan
Th
aila
nd
Chin
a
Mala
ysia
Peru
Phili
ppin
es
Hun
gary
Czech R
ep
ublic
Kore
a
Russia
Pola
nd
Qata
r
United A
rab
Em
irate
s
India
Bra
zil
Mexic
o
Tu
rke
y
Chile
Sou
th A
fric
a
Indo
nesia
Colo
mb
ia
Egypt
Gre
ece
International Reserves: 2014(% GDP)
International reserves are equivalent to 29 percent of GDP
Source: IMF and Bloomberg
7
177.2
90.5
76.965.2 65.0
57.050.1 48.8 47.2 45.9 41.6 41.1 38.0 37.6 37.2 35.7 33.5 31.5
25.0 20.1 17.9 13.9 12.1
Gross public debt: 2014 (% GDP)
Public debt is among the lowest in emerging economies
Source: IMF and BCRP
8
Banking system has a low exposure to external liabilities
7.0
4.0
9.5
5.3
3.9
2.6
3.2
6.6
2.73.2
1.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Short Term External Liabilities of the Banking Sector(% of GDP)
*Up to June 20159
Dollarization ratio dropped to almost a half since 2005
62
5755
50
46 4645
4341
38
34
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Dollarization Ratio of Credit to the Private Sector
(%)
* Up to July 2015
10
Credit to GDP almost doubled since 2005
21.920.8
23.9
28.9 29.330.5
31.933.2
36.5
39.340.7
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
Credit to the Private Sector(% of GDP)
* Up to June 2015
11
Peru’s Gross fixed investment is among the highest in Emerging Economies
17.3 18.220.3
23.9 23.325.1 24.0
25.8 26.6 25.8
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Gross fixed investment (% of GDP)
Private investment Public Investment
% GDP 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
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
22.2
17.0
21.9
25.0
20.0
Chile Brazil Mexico Colombia Latin America
Total investment(% of GDP)
Source: IMF.
20.7
31.533.8
25.2
India Indonesia Malaysia Philippines
Total investment(% of GDP)
Source: IMF.
12
1. Peru’s growth is based on strong fundamentals
2. Recent economic developments and prospects
3. Policy Framework
4. Concluding Remarks
Agenda
13
GDP growth is expected to recover in the next few years
6.3
7.5
8.5
9.1
1.0
8.5
6.56.0 5.8
2.4
2.9
4.0
5.8
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* 2016* 2017**
Peruvian Annual GDP Growth(in percentages)
*Consensus Forecast, August 2015
**Inflation Report, May 2015
14
Signs of recovery: Employment indicators
1.61.8
2.9
4.3
3.3 3.3
3.0
3.6
2.32.4
1.71.9
1.5
2.01.9
0.6
0.3 0.3
-0.2
0.5
0.2
1.21.1
0.90.8
0.20.4
0.60.8
1.2
1.8
Employment(Annual percentage change)
Source: Statistical Institute of Peru (INEI)
15
Signs of recovery: Electricity Production is growing faster than last year
Source: COES
7.4
4.8 4.8
7.57.2
7.47.2
5.4
6.5
7.6
5.15.3
6.0
7.16.9
5.1 5.24.9 4.9
4.6
5.2 5.2
4.8 4.75.0
3.7
5.6 5.55.3
5.6
5.0
7.0
16
Mining sector has started to show higher growth rates
-7.4
-2.3
-4.2
5.3
2.5
8.7
7.0
11.1
2.4
11.2
7.78.4 8.3
9.9
-0.7
-7.9
-2.9
-6.7
-3.9-4.4 -4.8
0.2
-0.9
-7.7
5.8
-1.0
14.7
18.1
8.7
14.1
17
Copper production would increase by 88 percent in the period 2014-2018
1.3 1.3
1.6
1.9
2.2
2.4
2013 2014 2015* 2016* 2017* 2018*
COPPER PRODUCTION(million of tons)
Constancia
(Cusco)
Las Bambas
(Apurímac)
Cerro Verde
(Arequipa)
Toquepala
Expansion
(Tacna)
Toromocho
(Junín)
* Forecast
18
Peru leads the exports of several agricultural and mining products
AGRICULTURAL
PRODUCTS
US$
millions
WORLD
RANKING
Quinoa 196 2
Fresh asparagus 385 2
Canned asparagus 150 2
Organic banana 119 3
Avocados 304 4
Grape 643 5
Paprika 90 5
Coffee 734 7*
Artichoke 93 8
*Organic coffe ranks first.
Source: Comtrade, FAO
MINERAL
PRODUCTS
US$
millions
WORLD
RANKING
Zinc 1 504 2
Copper 8 875 2
Lead 1 131 3
Silver* 3 634 3
Tin 540 4
Molybdenum 360 5
Gold 5 660 6
*Includes refined and concentraded silver.
Source: Comtrade, FAO
19
The current account deficit is financed by long-term private capital inflows
1/ Includes net foreign investment, portfolio investment and private sector's long-term disbursement.
-4.3
-0.5
-2.4-1.9
-2.7
-4.2 -4.0-3.2 -3.1
-2.0
8.3
7.0
9.3
7.2
10.8
9.5
7.2
4.7 4.33.8
2008 2009 2010 2011 2012 2013 2014 2015* 2016* 2017*
CURRENT ACCOUNT AND LONG-TERM EXTERNAL FINANCING OF THE PRIVATE SECTOR: 2005-2017 1/
(% of GDP)
Current Account Long-term financing of the private sector
* Forecast
20
Expansionary fiscal stance would contribute to revert economic cycle
-1.1
-0.3
2.3
2.9
2.4
-1.3
-0.2
2.02.2
0.9
-0.3
-2.2
-2.7 -2.6
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2 014 2015* 2016* 2017*
Fiscal Surplus(% of GDP)
* Forecast
21
Higher public investment in the following years
-0.2
10.2
17.5 17.1
27.9
32.9
14.2
-11.2
19.9
10.7
-2.4 -2.0
8.5
5.0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2 014 2015* 2016* 2017*
Public Investment(% chg)
* Forecast
22
1. Peru’s growth is based on strong fundamentals
2. Recent economic developments and prospects
3. Policy Framework
4. Concluding Remarks
Agenda
23
3.25
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Feb
/12
May/1
2
Aug
/12
No
v/1
2
Feb
/13
May/1
3
Aug
/13
No
v/1
3
Feb
/14
May/1
4
Aug
/14
No
v/1
4
Feb
/15
May/1
5
Aug
/15
The Central Bank of Peru lowered its monetary policy interest rate 4 times sinceNovember 2013
Monetary policy interest rate(%)
24
Macro-prudential measures aim at securing sustainable credit growth and contributing to de-dollarization: Domestic Currency Reserve Requirements are now lower than two years ago.
6.6
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Jan
-11
Mar
-11
May
-11
Jul-
11
Sep
-11
No
v-1
1
Jan
-12
Mar
-12
May
-12
Jul-
12
Sep
-12
No
v-1
2
Jan
-13
Mar
-13
May
-13
Jul-
13
Sep
-13
No
v-1
3
Jan
-14
Mar
-14
May
-14
Jul-
14
Sep
-14
No
v-1
4
Jan
-15
Mar
-15
May
-15
*
Jul-
15
*
Domestic Currency Reserve Requirements(% of total obligations subject to reserve requirements)
Marginal Average
* Preliminar
25
70.0
35.6
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Jan
-11
Mar
-11
May
-11
Jul-
11
Sep
-11
No
v-1
1
Jan
-12
Mar
-12
May
-12
Jul-
12
Sep
-12
No
v-1
2
Jan
-13
Mar
-13
May
-13
Jul-
13
Sep
-13
No
v-1
3
Jan
-14
Mar
-14
May
-14
Jul-
14
Sep
-14
No
v-1
4
Jan
-15
Mar
-15
May
-15
*
Jul-
15
*
Foreign Currency Reserve Requirements(% of total obligations subect to reserve requirements)
Marginal Average
* Preliminar
Macro-prudential measures aim at securing sustainable credit growth and contributing to de-dollarization: Foreign Currency Reserve Requirements are now higher than last year.
26
As a result, we observe higher credit growth in domestic currency and lower credit growth in foreign currency
ANNUAL GROWTH OF CREDIT TO THE PRIVATE SECTOR %
18.1
25.3
18.2
26.1
6.8
2.20.3
-16.1
8.8
-20
-15
-10
-5
0
5
10
15
20
25
30
Soles US$ Total
27
Exchange Rates and FOREX Intervention
-600
-400
-200
0
200
400
600
2.50
2.65
2.80
2.95
3.10
3.25
01
-en
e-1
2
01
-ma
r-1
2
01
-ma
y-1
2
01
-jul-1
2
01
-se
p-1
2
01
-no
v-1
2
01
-en
e-1
3
01
-ma
r-1
3
01
-ma
y-1
3
01
-jul-1
3
01
-se
p-1
3
01
-no
v-1
3
01
-en
e-1
4
01
-ma
r-1
4
01
-ma
y-1
4
01
-jul-1
4
01
-se
p-1
4
01
-no
v-1
4
01
-en
e-1
5
01
-ma
r-1
5
01
-ma
y-1
5
01
-jul-1
5
FO
RE
X N
et
Pu
rch
as
es
(M
illio
ns
of
US
$)
Ex
ch
an
ge
Ra
te (
So
les
pe
r d
oll
ar)
Exchange Rate and Foreign Exchange Intervention
Net purchases of FX Exchange Rate
FOREX Net purchases
(MillIons OF US$)
2012 13 274
2013 - 2015* -11 146
*Up to August 27th
28
Currencies of main Latin American and Asian Countries have experienced a depreciation of more than 30 percent since Jan-2013
Peru
Chile
Indonesia
Mexico
India
-10
0
10
20
30
40
50
60
02/0
1/2
01
3
02/0
2/2
01
3
02/0
3/2
01
3
02/0
4/2
01
3
02/0
5/2
01
3
02/0
6/2
01
3
02/0
7/2
01
3
02/0
8/2
01
3
02/0
9/2
01
3
02/1
0/2
01
3
02/1
1/2
01
3
02/1
2/2
01
3
02/0
1/2
01
4
02/0
2/2
01
4
02/0
3/2
01
4
02/0
4/2
01
4
02/0
5/2
01
4
02/0
6/2
01
4
02/0
7/2
01
4
02/0
8/2
01
4
02/0
9/2
01
4
02/1
0/2
01
4
02/1
1/2
01
4
02/1
2/2
01
4
02/0
1/2
01
5
02/0
2/2
01
5
02/0
3/2
01
5
02/0
4/2
01
5
02/0
5/2
01
5
02/0
6/2
01
5
02/0
7/2
01
5
02/0
8/2
01
5
02/0
9/2
01
5
Cumulative Depreciation of Nominal Exchange Rate(in percentages)
Peru Chile Indonesia India Singapur Mexico
Singapur
29
Real Equilibrium Exchange Rate
The Equilibrium Real Exchange Rate takes into account the Peruvian relative productivity with respect to its trade partners,
the terms of trade, the net foreign assets, the openness degree and the fiscal position.
30
Annual Inflation Forecast converges to the target range in 2016
31
1. Peru’s growth is based on strong fundamentals
2. Recent economic developments and prospects
3. Policy Framework
4. Concluding Remarks
Agenda
32
Concluding Remarks
• Exogenous factors have been affecting the economic cycle;
however, the Peruvian economy holds strong fundamentals.
• During this period, the Central Bank has had an expansionary
position, providing the required liquidity to the market.
• An active fiscal position is required to offset the lower private
spending.
• It is necessary to deepen structural measures to strengthen the
recovery of potential growth.33
Peru’s fundamentals and economic outlookJulio Velarde
Governor
Central Bank of Peru
September 2015