Boston, MA -- (ReleaseWire) -- 05/05/2014 -- BMI maintains its positive outlook on Peru's shipping and port sector. While we expect real GDP growth to level off at around 5.0% during our forecast period, below its recent trend, significant mineral wealth, attractive investment opportunities at the sector level, and a growing consumer story underpin our view that Peru will remain one of the most dynamic economies in Latin America in the coming years.
There are downside risks, nevertheless. With exports to China comprising over 15.0% of total exports in 2012 and the mining sector and related industries heavily dependent on foreign investment. Underdeveloped infrastructure, capacity constraints, declines in major mining firms' capital expenditure programmes and continued social unrest could also weigh on shipping volumes. Because of these risks, we maintain our below-consensus view on real GDP growth, and anticipate a wider current account deficit and further currency weakness over the next few years.
Headline Industry Data:
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- In 2014, we are projecting box traffic at Callao to grow by 5% year-on-year (y-o-y) to 1.9mn twenty-foot equivalent units (TEUs).
- In 2014, we expect growth of 9.4% in total tonnage throughput at Callao to 2.07mn tonnes.
Key Industry Trends
Morales Calls For Discussions On Mega Port Project: Bolivian President Evo Morales has expressed the need to discuss a construction plan for the Ilo mega port with the President of Peru. Once constructed, the Peruvian port will reduce the time needed and distance covered when exporting to Western countries, said Morales.
APM Terminals To Invest US$58mn In Callao: APM Terminals is to invest US$58mn in a new conveyor belt and the expansion of the container yard at its terminal Mulle Norte, in Callao. The General Director of APM Terminals Callao, Henrik Kristensen said that the refurbishment will be carried out in five stages.
Throughput At Callao up 13.4% From January To November: In November 2013, the movement of cargo through the port of Callao reached 2,584,182 tonnes which represents an increase of 7.2% over the same period of 2012, according to the National Port Authority of Peru (APN).
Key Risks To Outlook
A delayed rebalancing of the Chinese economy could result in a continuation of robust external demand for Peru's mining exports, as well as stronger investment inflows than we currently anticipate. These factors could bolster Peru's economy in the coming years, posing major upside risks to our real GDP growth forecast for 2014. However, if growth slows in the latter half of 2013 we could see counter-cyclical fiscal policy, such as increased funding for the ongoing infrastructure stimulus programme, bolstering growth and posing upside risks to our forecasts.
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