Peru’s economy expanded at the fastest pace in almost two years in the fourth quarter of 2015, and it is expected to keep growing this year, driven by surging mining output that is set to offset sluggish investment.
According to a new study published this week by BMI Research, the South American nation will see real GDP growth accelerate in 2016, as its extractive sector will remain among the strongest in the region.
The analysts now estimate Peru’s GDP growth in 2015 hitting 3.2%, up from the 2.8% previous forecast. However, they also believe the late surge in growth represents the earlier-than-expected realization of production capacity in the mining sector. As a result, BMI has downwardly revised its forecast for 2016 growth to 3.6%, from 3.8% previously.
The country is still reaping the benefits of the decade-long commodity boom as the last of a series of giant copper mines, MMG’s Las Bambas, ramps up production this year.
Gold projects will also add to Peru’s economy. In February, Barrick said it plans to spend $640 million extending the life of its Lagunas Norte mine, one of the world’s largest gold mines.
Figures from the National Society of Mining, Oil and Energy (SNMPE) show that Peru’s mining project portfolio will stand at around $56 billion as at October 2016.
However, a drop in metals prices over the past few years, particularly copper and gold, means once those mines come on stream they would likely be the last ones to begin production for a while.
Mining accounts for 12% of Peru’s GDP and 57% of its exports.