September 20, 2010 / 7:59 PM / 9 years ago

Peru economy to grow 6 to 7 pct in 2011 - minister

* Economy forecast to grow 8 percent this year

* Election unlikely to hamper economic growth - Benavides

By Patricia Velez

LIMA, Sept 20 (Reuters) - Peru’s economy will grow more than expected in 2011, fueled by booming consumer demand, despite political uncertainty ahead of next year’s presidential election, Peru’s finance minister said on Monday.

Peru “will have a growth rate of between 6 and 7 percent,” said Ismael Benavides, above the 5 percent growth rate the finance ministry had forecast for 2011 in a recent report.

Benavides, a well-respected banker, replaced Mercedes Araoz at the helm of the finance ministry last week. [ID:nN14227559]

He said the surging building sector and strong consumer demand are likely to fuel growth next year.

Consumer demand has overtaken the mining sector - Peru’s traditional economic engine - to become the biggest contributor to growth.

“If we end this year with 8 percent (growth) or slightly higher, we’re definitely going to see momentum for growth higher than what was forecast in the first part of 2011,” Benavides told a news conference.

Peru’s economy will expand 8 percent this year, according to the central bank.

Benavides said political uncertainty ahead of next year’s election is unlikely to hurt the economy because possible candidates support the economic policies that have helped Peru become one of the world’s fastest-growing economies.

“What I’ve seen is that all the candidates have taken the position of maintaining existing economic policies ... the consensus is that we’re on the right path,” he said.

Peru will go to the polls in April 2011. President Alan Garcia is prohibited by law from seeking another term.

Lima Mayor Luis Castaneda and Keiko Fujimori, a popular lawmaker and the daughter of former President Alberto Fujimori, are favorites to win the race, according to opinion polls.

Peru has become a magnet for foreign investors in recent years. Between 2010 and 2012 they will have invested some $38 billion in the country, mainly in the mining, energy and telecommunications sectors. (Writing by Emily Schmall; Editing by Dan Grebler)

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