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PERU'S INDUSTRIAL DEMAND STRENGTHENS.

For the remainder of 2002, gains in Peru's industrial expenditure will outstrip those at the household level. Industrial expansion is mainly driven by the primary (agriculture and mining) sectors, which showed year-on-year gains in excess of 8 percent during the second quarter of this year.

Household consumption will experience modest year-on-year gains in the range of 2 to 3 percent during the second half of 2002, with strongest gains corresponding to non-durable goods. For the remainder of this year, demand for high-end durables will be undercut by consumer concerns related to unemployment. In the three-month period of February through April 2002, open unemployment rose 1.7 percent. Job creation is on the rise, but the number of Peruvians entering the work force is rising faster. Demographic factors will put upward pressure on unemployment for years to come. One reason is that Peru's rate of natural population increase of about 1.8 percent is more than 10 percent higher than the South American average.

The mining and agriculture sectors will experience healthy year-on-year gains this year. During the second quarter of this year, gains in copper sales topped 75 percent. Other mining sectors experiencing double-digit gains include silver and zinc. The rise in mining activity and petroleum production this year will boost demand for associated materials and supplies during the second half of 2002.

The Toledo regime is making headway on weaning Peru from its heavy dependence on primary industry. Recovery in the primary industry sector is boosting demand for Peruvian made supplies and equipment. During the second quarter, the manufacturing sector experienced year-on-year growth in excess of 13 percent. Strongest gains (over 40 percent) were noted in the fledgling capital goods manufacturing sector. Growth in demand for intermediate goods topped 15 percent and should be firm through the remainder of 2002.
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Publication:Market Latin America
Geographic Code:3PERU
Date:Aug 1, 2002
Words:301
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