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Viewing report
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Peru Shipping Report Q4 2011
Business Monitor International, Sep 2011, Pages: 84
BMI View Peru's economic growth will remain dependent on private consumption as fixed investment slows down because of uncertainty regarding Ollanta Humala's economic policies. Meanwhile, net exports will continue to act as a drag on the economy. We note that as long as Humala remains committed to his new moderate self, his policies should contribute to economic growth in Peru, by anchoring foreign direct investment inflows.
Peru's GDP grew 8.8% y-o-y in Q111 largely on the back of private consumption and we believe strong growth will continue throughout 2011. Indeed, private spending contributed six percentage points (pp) to growth in the first quarter of 2011 - becoming the main driver of the economy, which bodes well for imports of containerised goods.
Meanwhile, net exports will continue to be a drag on the economy as exports are likely to weaken as commodities prices moderate in H211 and imports continue to rise, led by higher consumer demand. We believe that despite Ollanta Humala's victory in the presidential elections the outlook of the economy remains positive and, as we wait for a clearer message from Humala with regards to his economic policy, we maintain our real GDP growth forecasts of 6.2% in 2011 and 4.9% in 2012.
Headline Industry Data
- We are projecting box traffic at Callao to grow 12.3% this year to 1.022mn 20-foot equivalent units (TEUs).
- We expect growth of 6.5% in total tonnage throughput at Callao to 18.572mn tonnes.
- Total Peruvian trade (imports plus exports) will remain vigorous in 2011: BMI predicts real term growth of 11.5%, compared with 9.8% in 2010.
Key Industry Trends Callao Concession Faces More Scrutiny From Incoming Administration
Concerns are mounting about the future of APM Terminal's Muelle Norte container terminal concession at Peru's Callao, the country's biggest port, following reports that the new administration is to take a closer look at the concession. Although the announcement has raised fears about President Ollanto Humala's stance towards foreign direct investment, BMI maintains its view that the president-elect will pursue a more moderate policy stance than many investors had initially feared.
Peru's Push To Become Gateway To Asia Continues Peru's push to position itself as South America's 'gateway to Asia' continues, with private investment promotion agency Proinversión expected to award a tender for the much-feted transcontinental railway project by the first week of November 2011. The news bolsters our view that Peru has the potential to become a regional logistics centre, providing strong growth opportunities for shippers and shipping lines. BMI believes that when completed the railway will allow Peru to take advantage of Brazil's rapidly increasing raw material exports to China.
Key Risks To Outlook BMI believes risks to our Peruvian port and shipping forecasts are mainly on the upside, with increased private consumption possibly leading to greater demand for containerised goods. Despite concerns during the presidential campaign, we expect consumption to benefit from Humala's economic policies. Humala's new economic plan does not include increasing taxes on consumers, in fact Humala will seek to reduce VAT in the coming years, supporting consumer demand.
Downside risks come in the form of a possible slowdown in Chinese demand, which would hit shipments of copper and other raw materials from Peru.
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