November 2014
Comparisons are odious?
Peru’s Economic Outlook and Comparison to Its Regional
Peers
Munir Jalil
Chief Economist
Andean Region
[email protected]
+57 1 639 41 95
See Appendix A-1 for Analyst Certification, Important Disclosures and non-US research analyst disclosures
Citi Research is a division of Citigroup Global Markets Inc. (the "Firm"), which does and seeks to do business with companies covered in its research reports. As a result, investors should be
aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Peru
Source: Citi Research & Bloomberg
2

Area:

Population (2013E):
30.1MM

Nominal GDP (2012):
US$199Bn

Nominal GDP (2013E):
US$210Bn

Nominal GDP (2014E):
US$217Bn

GDP per Capita (2012):
US$6,712

GDP per Capita (2013E):
US$6,960

GDP per Capita (2014E):
US$7,075

Real GDP Growth (2013E):
5.8%

Real GDP Growth (2014E):
2.5%

CPI (2013):
2.9%

CPI (2014E):
3.1%

Exports FOB (2013E):
$42.2Bn

Exports FOB (2014E):
$37.0Bn

Imports CIF (2013E):
$42.2Bn

Imports CIF (2014E):
$39.7Bn

FDI (2013E):
$9.3Bn

FDI (2014E):
$8.0Bn
1,285,216 sq km
Some Macroeconomic Forecasts
2007 2008 2009 2010 2011 2012 2013F 2014F 2015F
Summary Data
Nominal GDP, USD bn
Nominal GDP, local currency bn
Economic Activity
Real GDP, yoy avg
Real Investment Growth % yoy
Real Consumption Growth % yoy
Prices, Money & Credit
CPI, % yoy (Citi estimates)
CPI, % avg
Balance of Payments, USD bn
Current account
% of GDP
Trade balance
Exports
Imports
Public Finances, % of GDP
Public Debt
107
336
127
371
127
382
153
435
176
486
199
526
208
563
207
584
224
628
8.5
31.3
8.0
9.1 1.0 8.5
29.4 -22.9 38.8
8.6 4.1 8.2
6.5
12.9
5.8
6.0
12.3
6.4
5.8
10.5
5.5
2.5
0.1
4.7
3.8
3.5
5.1
2.9
2.8
3.1
3.2
2.5
2.5
3.9
1.8
6.7
5.8
0.2
2.9
2.1
1.5
4.7
3.4
2.6
3.7
1.5
1.4
8.5
28.1
19.6
-5.3
-4.2
2.6
31.0
28.4
-0.6
-0.5
6.1
27.1
21.0
-3.5
-2.3
7.0
35.8
28.8
-3.2
-1.8
9.2
46.4
37.2
-6.3
-3.2
5.2
46.4
41.1
-9.1 -11.8 -11.7
-4.4 -5.7 -5.2
0.0 -2.7 -2.4
42.2 37.0 38.8
42.2 39.7 41.2
29.8
24.1
27.2
23.5
21.8
19.9
17.4
17.4
17.0
3
Source: Citi Research
Source: National statistics center or central bank of each country & Citi Research
Jun-10
-2%
Jun-14
Dec-13
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-09
Jun-14
Dec-13
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-10
Dec-09
0%
Jun-14
Jun-09
Dec-09
Dec-08
Jun-08
Dec-07
Jun-07
2%
Dec-13
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-10
Dec-09
10%
Dec-08
Jun-08
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
Jun-09
Jun-07
Dec-07
Jun-06
Dec-06
12%
Dec-08
Jun-08
Dec-07
Jun-07
Dec-06
4.28%
Dec-06
Colombia
Jun-06
-2%
Dec-05
-4%
Jun-06
4%
Dec-05
-2%
Dec-05
6%
Jun-05
4%
Jun-05
10%
Dec-04
6%
Jun-05
1.66%
Jun-04
12%
Dec-04
8%
Jun-04
0%
Jun-14
2%
Dec-13
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-10
Dec-09
Jun-09
Dec-08
Peru
Dec-04
Jun-04
Jun-14
Dec-13
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-10
Dec-09
Jun-09
Jun-08
Dec-07
Jun-07
Dec-06
Jun-06
Dec-05
Jun-05
Dec-04
14%
Dec-08
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Jun-08
Dec-07
Jun-07
Dec-06
Jun-06
Dec-05
Jun-05
Dec-04
Jun-04
Jun-04
Economic Growth %YoY
Chile
10%
8%
1.94%
Mexico
1.56%
Brasil
8%
6%
4%
2%
0%
-0.82%
-4%
4
65%
65%
60%
60%
55%
55%
50%
50%
70%
% of GDP
Colombia
70%
Source: National statistics center or central bank of each country & Citi Research
% of GDP
Dec-13
Apr-13
Aug-12
Dec-11
Apr-11
Aug-10
50%
Dec-09
50%
Apr-09
Peru
Aug-08
55%
Dec-07
55%
Apr-07
60%
Aug-06
60%
Dec-05
61.2%
Apr-05
70%
Aug-04
65%
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
70%
% of GDP
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Evolution of private consumption
% of GDP
Chile
67.2%
65%
Mexico
65.21%
67.90%
5
Jun-05
11.33%
% of GDP
16.68%
14%
8%
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Peru
15%
14%
14%
13%
13%
11%
11%
10%
10%
9%
9%
8%
8%
Colombia
15%
12%
10%
10%
9%
Source: National statistics center or central bank of each country & Citi Research
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
18%
Jun-14
12%
Dec-13
Jun-13
Dec-12
Jun-12
Dec-11
Jun-11
Dec-10
Jun-10
Dec-09
Jun-09
Dec-08
% of GDP
Jun-08
Dec-07
Jun-07
Dec-06
Jun-06
Dec-05
20%
Dec-04
Dec-03
Jun-04
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
15%
Jun-04
Dec-03
Evolution of government consumption
% of GDP
% of GDP
Chile
12%
11.84%
Mexico
14%
16%
13%
12%
11%
11.12%
8%
6
Source: National statistics center or central bank of each country & Citi Research
Jun-14
Nov-13
10%
Apr-13
10%
Sep-12
15%
Feb-12
15%
Jul-11
20%
Dec-10
20%
May-10
25%
Oct-09
25%
Mar-09
30%
Jun-14
Nov-13
Apr-13
Sep-12
Feb-12
Jul-11
Dec-10
May-10
Oct-09
Mar-09
Aug-08
Jan-08
Jun-07
Nov-06
Apr-06
Sep-05
Feb-05
Peru
Aug-08
Colombia
Jan-08
28.56%
Jun-07
10%
Nov-06
10%
Apr-06
15%
Sep-05
15%
Feb-05
20%
Jul-04
27.89%
Jul-04
20%
Dec-03
Jun-14
% of GDP
Dec-03
% of GDP
Jun-14
Nov-13
Apr-13
Sep-12
Feb-12
Jul-11
Dec-10
May-10
Oct-09
Mar-09
Aug-08
Jan-08
Jun-07
Nov-06
Apr-06
Sep-05
Feb-05
25%
Nov-13
Apr-13
Sep-12
Feb-12
Jul-11
Dec-10
May-10
Oct-09
Mar-09
Aug-08
Jan-08
Jun-07
Nov-06
Apr-06
Sep-05
Feb-05
30%
Jul-04
Dec-03
30%
Jul-04
Dec-03
Gross fixed capital formation
Chile
30%
25%
24.70%
% of GDP
Mexico
21.20%
7
Exports composition by product
Peru
Chile
26.6%
52.53%
37.74%
1.9%
4.0%
12.3%
55.1%
Mining
Oil and Derivatives
Fishing
Agriculture
9.73%
Other Exports
Mining
Agricultural , forestry and fisheries
Colombia
Industry
Mexico
29.6%
1.35%
84.05%
3.06%
55.2%
0.8%
11.54%
5.1%
9.3%
Oil and derivatives
Coal
Coffee
Ferronickel
Other Exports
Manufactures
Oil
Agricultural
Extractive (Non-Oil)
8
Source: National statistics center or central bank of each country & Citi Research
Oil & Derivatives
Source: National statistics center or central bank of each country & Citi Research
10%
Apr-14
Sep-13
Feb-13
Jul-12
Dec-11
May-11
Oct-10
Mar-10
Aug-09
Oil
60%
5%
0%
Oil Exports
9
Apr-14
Sep-13
Feb-13
Jul-12
Dec-11
May-11
Oct-10
Mar-10
Aug-09
Jan-09
Jun-08
% of total
exports
Jan-09
Nov-07
Apr-07
Sep-06
Feb-06
Jul-05
Peru
Jun-08
% of total
exports
Nov-07
54.0%
Apr-07
25%
Sep-06
Colombia
Feb-06
% of total
exports
Dec-04
0%
Jul-05
10%
May-04
14.57%
Dec-04
30%
Oct-03
40%
70%
Oct-03
50.20%
80%
May-04
Mar-03
64.77%
Mar-03
20%
Jun-14
50%
Apr-14
Sep-13
Feb-13
Jul-12
Dec-11
May-11
Oct-10
Mar-10
Aug-09
Jan-09
Jun-08
60%
Sep-13
Dec-12
Mar-12
Jun-11
Sep-10
Mining
Dec-09
Mar-09
Jun-08
Oil & Mining
Sep-07
Dec-06
Nov-07
Apr-07
Sep-06
Feb-06
Jul-05
Dec-04
May-04
% of total
exports
Mar-06
Jun-05
Sep-04
Dec-03
Mar-03
Jun-02
80%
70%
60%
50%
40%
30%
20%
10%
0%
Sep-01
70%
Oct-03
Mar-03
80%
Dec-00
Mar-00
Oil & mining exports over time
Chile
55.76%
50%
40%
30%
20%
10%
0%
Mining Exports
Mexico
20%
15%
10.79%
80
10
70
0
Source: National statistics center or central bank of each country & Citi Research
10
Sep-14
Sep-13
Sep-12
Sep-11
Sep-10
Sep-09
Sep-08
Sep-07
Sep-06
Sep-05
Sep-04
100
Sep-14
Sep-13
90
Sep-12
100
Sep-11
40
Sep-10
110
Sep-09
120
Sep-08
50
Sep-07
130
Sep-03
160
Sep-06
60
Sep-02
Peru
Sep-05
Colombia
Sep-04
140
154.6
Sep-03
150
Sep-02
50
Sep-01
60
Sep-01
70
Sep-00
80
Sep-00
90
Sep-99
99.6
Sep-99
Sep-98
110
Sep-98
100
Sep-14
Sep-13
Sep-12
Sep-11
Sep-10
Sep-09
Sep-08
Sep-07
160
Sep-06
120
Sep-05
170
Sep-04
Sep-03
Sep-02
Sep-01
Sep-00
Sep-99
Sep-98
Terms of Trade
Chile
140
120
111.4
80
60
40
20
0
70
Mexico
55.8
30
20
Copper Production
140
Thousands Fine
Metric Tons
US$ cents per
pound
Peru
120
500
450
400
100
350
300
80
250
60
200
150
40
100
20
50
0
Mar-01
Sep-01
Mar-02
Sep-02
Mar-03
Sep-03
Mar-04
Sep-04
Mar-05
Sep-05
Mar-06
Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
0
Copper production (FMT)
LME Copper Price
600
Thousands Fine
Metric Tons
Chile
US$ cents per
pound
500
450
400
350
300
250
200
150
100
50
0
500
400
300
200
100
Mar-03
Sep-03
Mar-04
Sep-04
Mar-05
Sep-05
Mar-06
Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
0
Copper Production
Source: INEI, Cochilco & Citi Research
LME Copper price
11
How much of the commodities’ boom was saved
and how it was used
Marginal propensity to save revenues
stemming from commodities
Savings’ use as a ratio of extraordinary
income
150
1
0,9
0,8
0,7
0,6
0,5
0,4
0,3
0,2
0,1
0
100
Capital
Activos Externos
50
0
Venezuela
Peru
Paraguay
Ecuador
Colombia
Chile
Brasil
Bolivia
-50
-100
Ahorro marginal de Ingresos de bienes basicos
Source “Alder, G; Magud, N. 2013.“Four Decades of Terms of Trade Booms: Saving-Invesment
Patterns and New Metric of Income Windfall” .WP 13/103. FMI
Primary surplus or deficit of the Central Government
0%
5%
% of GDP
Brazil
Peru
% of GDP
-1%
4%
-2%
3%
2%
-3%
1%
0%
10%
% of GDP
Chile
8%
-1%
6%
4%
2%
0%
5%
Colombia
% of GDP
4%
-2%
-4%
-6%
3%
2%
1%
0%
-1%
5%
% of GDP
Mexico
4%
3%
2%
1%
0%
-1%
*Accumulated value until June
13
Source: National statistics center or central bank of each country & Citi Research
Current Account Balance
4
Peru
% of GDP
6
5
4
3
2
1
0
-1
-2
-3
-4
2
0
-2
-4
-6
-6.78
-8
2
Colombia
% of GDP
% of GDP
-3.42
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
% of GDP
1
0.0
0
-0.5
-1
-1.0
-2
-1.5
-3
-2.0
-4
-2.5
-4.3
-5
Chile
Mexico
-2.08
2014*
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
-3.0
14
Source: National statistics center or central bank of each country & Citi Research
IRS Circular 230 Disclosure: Citigroup Inc. and its affiliates do not provide tax or legal advice. Any discussion of tax matters in these materials (i) is not
intended or written to be used, and cannot be used or relied upon, by you for the purpose of avoiding any tax penalties and (ii) may have been written in
connection with the "promotion or marketing" of any transaction contemplated hereby ("Transaction"). Accordingly, you should seek advice based on
your particular circumstances from an independent tax advisor.
Any terms set forth herein are intended for discussion purposes only and are subject to the final terms as set forth in separate definitive written agreements. This
presentation is not a commitment to lend, syndicate a financing, underwrite or purchase securities, or commit capital nor does it obligate us to enter into such a
commitment, nor are we acting as a fiduciary to you. By accepting this presentation, subject to applicable law or regulation, you agree to keep confidential the
existence of and proposed terms for any Transaction.
Prior to entering into any Transaction, you should determine, without reliance upon us or our affiliates, the economic risks and merits (and independently determine
that you are able to assume these risks) as well as the legal, tax and accounting characterizations and consequences of any such Transaction. In this regard, by
accepting this presentation, you acknowledge that (a) we are not in the business of providing (and you are not relying on us for) legal, tax or accounting advice, (b)
there may be legal, tax or accounting risks associated with any Transaction, (c) you should receive (and rely on) separate and qualified legal, tax and accounting
advice and (d) you should apprise senior management in your organization as to such legal, tax and accounting advice (and any risks associated with any Transaction)
and our disclaimer as to these matters. By acceptance of these materials, you and we hereby agree that from the commencement of discussions with respect to any
Transaction, and notwithstanding any other provision in this presentation, we hereby confirm that no participant in any Transaction shall be limited from disclosing the
U.S. tax treatment or U.S. tax structure of such Transaction.
We are required to obtain, verify and record certain information that identifies each entity that enters into a formal business relationship with us. We will ask for your
complete name, street address, and taxpayer ID number. We may also request corporate formation documents, or other forms of identification, to verify information
provided.
Any prices or levels contained herein are preliminary and indicative only and do not represent bids or offers. These indications are provided solely for your information
and consideration, are subject to change at any time without notice and are not intended as a solicitation with respect to the purchase or sale of any instrument. The
information contained in this presentation may include results of analyses from a quantitative model which represent potential future events that may or may not be
realized, and is not a complete analysis of every material fact representing any product. Any estimates included herein constitute our judgment as of the date hereof
and are subject to change without any notice. We and/or our affiliates may make a market in these instruments for our customers and for our own account.
Accordingly, we may have a position in any such instrument at any time.
Although this material may contain publicly available information about Citi corporate bond research, fixed income strategy or economic and market analysis, Citi policy
(i) prohibits employees from offering, directly or indirectly, a favorable or negative research opinion or offering to change an opinion as consideration or inducement for
the receipt of business or for compensation; and (ii) prohibits analysts from being compensated for specific recommendations or views contained in research reports.
So as to reduce the potential for conflicts of interest, as well as to reduce any appearance of conflicts of interest, Citi has enacted policies and procedures designed to
limit communications between its investment banking and research personnel to specifically prescribed circumstances.
© 2014 Citigroup Global Markets Inc. Member SIPC. All rights reserved. Citi and Citi and Arc Design are trademarks and service marks of Citigroup Inc. or its
15
affiliates and are used and registered throughout the world.