April 15, 2008 / 7:07 PM / 11 years ago

UPDATE 2-Peru's economy surges 11.9 pct in February

(Recasts, adds details, inflation)

LIMA, April 15 (Reuters) - Peru’s economy surged 11.92 percent in February from the same month a year ago, as a construction boom led the biggest monthly jump in growth since 1995, the National Statistics Institute said on Tuesday.

Growth of 9.8 percent in February had been expected, according to the median forecast in a Reuters poll of 11 economists. The finance ministry had projected February growth of 10.1 percent, and the faster-than-expected rate could renew talk about the economy overheating.

Construction surged 22.49 percent in February from the same month in 2007, while mining, the traditional engine of the Andean country, grew 14.65 percent in February from the same month a year ago.

Domestic demand is rising and sustaining an economic boom that began with minerals exports some six years ago.

The government has said Peru’s economy is reaping the benefits of a free-market foundation, laid since President Alan Garcia took office in 2006.

But as the country enjoys double-digit growth, some officials and analysts worry whether the boom might be too much, too soon.

Inflation, as measured as a price index for metropolitan Lima, has picked up, swelling some 2.18 percent in the first three months of 2008.

The central bank’s annual inflation target is 2 percent, plus or minus one percentage point. Inflation was nearly 4 percent in 2007.

So far this year, the central bank has raised deposit requirements and its benchmark interest rate to help ease inflationary pressures. The finance ministry has weighed in by slashing tariffs on food imports and fuel.

The government has said growth should moderate to between 6 percent and 7 percent in 2008 on slower global growth, but so far the Andean economy shows no signs of slowing down.

Peru’s economy grew some 9 percent last year. In the 12 months through February, it expanded 9.23 percent.


The jobless rate in metropolitan Lima, which is used as a proxy for the country, fell to 9.3 percent in the first three months of 2008, from 9.8 percent in the same quarter in 2007.

But unemployment was higher compared with the three months from December to February, when it was 9.0 percent, during a period that normally has seasonal retail jobs.

The average wage in Peru’s capital Lima, home to some 10 million people, rose 11.4 percent in the first three months of 2008, up from the same three months last year. (Reporting by Maria Luisa Palomino; Writing by Dana Ford; Editing by Diane Craft)

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