UPDATE 1-Peru's Humala vows to prioritize investment after 'bump in road'

Fri May 24, 2013 10:39pm EDT

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By Marco Aquino

LIMA May 24 (Reuters) - Peruvian President Ollanta Humala said on Friday he will prioritize investments and speed up infrastructure projects after the economy hit a "bump in the road" with unexpectedly slow growth in the first quarter.

Peru's economy slowed to expand 4.8 percent in the first three months of this year compared to the same period in 2012 as the Andean nation's traditional mining exports slipped on weakening mineral prices.

"We have decided to declare investments in the country to be of national interest," Humala told reporters.

He said the government has "the conviction to overcome" tough external economic factors.

Humala said he is introducing a package of reforms designed to boost investments, including a measure to facilitate access to capital markets and a new land use law that will move infrastructure projects forward faster.

"The best way to create (business) confidence is by doing what we're doing - taking concrete steps," Humala said.

Humala faced a wave of criticism in April after his administration said it was evaluating buying a stake in the Peruvian assets of Spanish energy firm Repsol .

The government gave up the plan in May but the controversy appeared to dent Humala's approval ratings.

Humala, a former military officer who abandoned his once leftist rhetoric before becoming president, said the potential purchase of Repsol's assets was "anecdotal" and more controversial in the media than in boardrooms.

Peru's economy has been growing at one of the fastest clips in the region - 6.3 percent last year.

A similar rate has been expected for 2013 but after the weak first-quarter expansion the central bank said it was considering trimming its growth forecast for this year, even as it expects economic activity to pick back up in April.

"What we are experiencing, particularly in the first semester of this year, is a bump in the road in the growth of economic productivity in large part because of external factors and a timidity in investing, especially in areas like mining," Humala said. "These are problems that always affect Peru."

Mining activity has historically fueled economic growth in Peru but surging domestic demand for everything from new homes to consumer goods has led growth in recent years.

Earlier this month the Andean nation posted its first quarterly trade deficit in more than four years.

Humala also told reporters a new law to give indigenous groups more say in mining and energy projects that affect them should not be seen as an obstacle to investments.

Communities cannot veto projects, but mining firms have worried the so-called prior consultation law will snarl approvals for projects.

The government is rolling back the law so it does not apply broadly across the Andes in numerous Quechua-speaking peasant communities.

Humala said the government will apply the law project-by-project instead of deciding who is "indigenous" and eligible for ' coverage beforehand.

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