Cloth (Transition) Seventeenth Century Southern Peru Central Reserve Bank of Peru Popular Peruvian Art, Exhibition Hall

Transcription

1 Cloth (Transition) Seventeenth Century Southern Peru Central Reserve Bank of Peru Popular Peruvian Art, Exhibition Hall 18

2 BANCO CENTRAL DE RESERVA DEL PERÚ II. OUTPUT AND EMPLOYMENT Gross Domestic Product (GDP) grew 0.3 percent in 1998, as the Peruvian economy confronted the effects of the El Niño phenomenon and the international financial crisis. As a result, per capita GDP declined by 1.5 percent in Over the last five years it had been growing at a yearly average rate of 4.0 percent. 160 GRAPH 3 PER CAPITA REAL GROSS DOMESTIC PRODUCT (August 1990 = 100) Domestic demand declined by 0.6 percent, in part due to liquidity constraints arising from the international financial crisis. Real private consumption declined 0.4 percent, resulting in a reduction of 2.2 percent in per capita terms. In the period, the yearly average growth of per capita consumption was 2.7 percent. Gross domestic investment declined 1.5 percent, reflecting the reduction of private investment (-2.3 percent). Public sector investment increased 3.4 percent, basically due to reconstruction works launched to respond to damage caused by El Niño. From the second quarter on, gross domestic investment fell considerably as international conditions worsened, causing a severe effect on expectations and economic activity. 19

3 TABLE 4 TOTAL SUPPLY AND DEMAND (Real percentage change) I. Total Supply GDP Imports 1/ II. Total Demand Domestic Demand a. Private Consumption b. Public Consumption c. Gross Domestic Investment i. Private 2/ ii. Public Exports 1/ / Of non-financial goods and services. 2/ Include change in inventories. The share of gross domestic investment in GDP was 24.3 percent in 1998, 0.1 percentage points less than the 1997 figure. Domestic savings which have exhibited a positive trend since 1993 were affected by lower terms of trade. In 1998, the domestic savings rate decreased to 18.3 percent of GDP, from 19.4 percent in However, it was higher than the 16.7 percent average for The share of private savings in GDP declined slightly, to 14.7 percent. On the other hand, public savings decreased by 1 percentage point to 3.6 percent of GDP in As a result, the use of external savings expanded from 5.0 to 6.0 percent between 1997 and 1998, reaching a peak of 7.6 percent of GDP in the first quarter, followed by a progressive reduction to 4.6 percent in the last quarter. TABLE 5 DOMESTIC AND EXTERNAL SAVINGS (Percentage of GDP) I. Domestic savings Public sector Private sector II. External savings III. SAVINGS = INVESTMENT Public sector Private sector

4 BANCO CENTRAL DE RESERVA DEL PERÚ 30 GRAPH 4 DOMESTIC SAVINGS AND INVESTMENT (Percentage of GDP) Domestic Savings Investment 1. GDP by sector Despite the low rate of growth of GDP in 1998 (0.3 percent), positive results were obtained in metallic mining (6.8 percent), agriculture (3.6 percent) and construction (1.3 percent). On the other hand, El Niño caused fishing and primary industries to decrease by 35.6 and 10.1 percent, respectively. Non-primary manufacturing grew slightly by 0.4 percent, while commercial activity decreased 2.2 percent. TABLE 6 GROSS DOMESTIC PRODUCT (Real percentage changes) Percentage Structure Agriculture and livestock Agricultural Livestock Fishing Mining and fuel Metals Oil and gas Manufacturing Based on raw materials Non-primary manufacturing Construction Trade Other services GDP

5 Agriculture and livestock In 1998 agriculture and livestock GDP grew 3.6 percent, despite the effects of El Niño. While agriculture was affected by the loss of arable land due to floods and landslides, lower yields and irrigation deficiencies and plagues, livestock breeding was favored by substantial rainfall. Recovery started in the fourth quarter, following normalization of weather conditions. Agricultural production had an overall growth of 2.0 percent, resulting from the increase in the production of yellow corn (16.0 percent), potato (8.0 percent), rice and coffee (6.0 percent) and other crops (1.0 percent). By contrast, cotton and sugar cane production declined 35.0 and 18.0 percent respectively. Livestock breeding grew 7.0 percent, reflecting increases in the production of poultry (11.0 percent), bovine meat and milk (5.0 percent each). Fishing El Niño had a devastating impact on the fishing industry. There was a gradual increase in the surface temperatures of Peru s coastal waters (March 1997 to June 1998) to levels considerably higher than normal. Fishing production decreased 35.6 percent. Fishmeal and fish oil production collapsed by 50.0 percent, while the volume of fish catch for direct human consumption products declined by 16.0 percent. The drop in industrial fishing was explained by a lower catch of anchovy, which was not compensated by a greater extraction of other sea species. El Niño diminished significantly the catch of anchovy since the second quarter of GRAPH 5 ANNUAL ANCHOVY EXTRACTION (Thousands of metric tons) The capture of other hot-water species, such as jack and chub mackerel, partially offset the severe drop in anchovy catch. Fish catch for direct human consumption also fell. In particular, the production of canned and frozen fish 22

6 BANCO CENTRAL DE RESERVA DEL PERÚ fell due to the absence of sardine and hake. Mining and fuel The 4.7 percent rise in mining production was based on the growth of metallic mining (6.8 percent), whereas oil and gas increased by only 0.3 percent. The expansion and opening of gold mines by producers such as Yanacocha, Ares and Sipán, explain the growth in metallic mining despite the effects of El Niño during the first half of the year. Gold and iron production increased 22.0 and 9.0 percent, respectively, due to the opening of new production units by Yanacocha (Cerro Yanacocha), Ares and Sipán, and an increased demand for Shougang-Hierro Peru products. The downward trend in mineral prices and the international financial crisis had TABLE 7 INVESTMENT BY MINING COMPANIES (Millons of US dollars) Mining companies Metals Period Southern Perú Limited S.A./ Cuajone Copper Minera Barrick Misquichica S.A./ Pierina Gold Compañía Minera Antamina S.A. Polymetallic Minera Yanacocha S.A./ Cerro Yanacocha Gold Refinería de Cajamarquilla S.A. Zinc Shougang Hierro Perú S.A./ Marcona Iron Sociedad Minera Cerro Verde S.A. Copper Compañía Minera Buenaventura S.A. Silver B.H.P. Tintaya S.A. Copper Minsur S.A. Tin Compañía Minera Milpo S.A. Polymetallic Empresa Minera Yauliyacu S.A./ Casapalca Polymetallic Empresa Minera Iscaycruz S.A. Polymetallic Minera Lizandro Proaño S.A. Gold Sociedad Minera La Granja S.A. Copper Volcán Compañía Minera S.A./ Mahr Tunnel Polymetallic Corporación Minera Nor Perú S.A. Polymetallic Compañía Minera Atacocha Polymetallic Lar Carbón S.A. Coal 7.0 Minera San Ignacio de Morococha S.A. Polymetallic Compañía Minera San Valentin S.A./ San Pedro Polymetallic 6.5 Minera Phelps Dodge del Perú/ Cerro Lindo, Calatos y Chapi Polymetallic Compañía Minera Ares S.A. Gold, silver Compañía Minera Sipán S.A. Gold Compañía Minera Raura S.A. Polymetallic Sociedad Minera Corona S.A. Copper, gold Sociedad Minera El Brocal S.A. Polymetallic Minorco Perú S.A. Copper, gold Compañía Minera Arcata S.A. Copper Minera Quellaveco S.A. Copper Sociedad Minera Berenguela S.A./ Berengela Copper, silver Others TOTAL MINING ,096.1 Source: Ministry of Energy and Mining 23

7 a negative impact on investment projects. Lower prices of copper, lead, zinc, gold and oil affected companies cash flow and investment decisions, and led to postponing projects such as La Granja and Quellaveco. Likewise, in July 1998 the Shell-Mobil consortium waived from phase two of the Camisea gas project, which involved exploitation of 13 trillion cubic feet of natural gas reserves and production of 380 million barrels of natural gas liquids. Shell-Mobil had invested US$ 250 million in phase one. In 1998, the most important projects were Southern Peru s Cuajone concentrate plant (US$ 259 million), the construction of Pierina (US$ 248 million), the feasibility study of the Antamina mine (US$ 160 millions) and the expansion of the Yanacocha gold mine (US$ 83 million) and the Cajamarquilla refinery (US$ 55 millions). Manufacturing Manufacturing production was affected by El Niño in the first half of the year and by the international crisis in the second half. Production recorded an annual contraction of 2.8 percent. Primary industries declined by 10.6 percent, while nonprimary industries grew slightly by 0.4 percent. In the primary industries, refined sugar production decreased by 33.0 percent, fishmeal and canned and frozen fish declined 48.0 and 50.0 percent respectively, whereas refined petroleum and non-ferrous metals expanded by 3.0 and 11.0 percent. The production of non-primary industries grew by 0.4 percent. In the first nine months, production grew 5.0 percent mainly due to the 12.0 percent rise in the first quarter but declined 11.0 percent in the fourth quarter due to domestic demand reduction. In annual terms, textiles, food, beverage and tobacco, and non-metallic mineral industries were the most affected, and contracted 10.0, 1.0 and 1.0 percent respectively. Construction Construction grew 1.3 percent, reflecting both supply and demand problems in the second quarter caused by El Niño and a severe demand contraction since September, in a context of credit restriction and low dynamism of El Niño-related reconstruction works. However, development of several construction projects continued, such as buildings for housing and offices new bank headquarters, hotels, service stations, productive infrastructure expansion of cement plants like Cementos Lima and Andino and construction of new plants by industrial firms and sanitation systems. Public works concentrated in reconstruction of houses and schools, as well as in minor irrigation infrastructure, all of them affected by El Niño. The repairing of the water and sewage systems in Lima, Cusco, Arequipa, Lambayeque and Ica was also carried out. In 1998, the Transportation System Repair Program paved 460 km of roads while the Rural Highways Rehabilitation 24

8 BANCO CENTRAL DE RESERVA DEL PERÚ and Maintenance Project repaired 2400km. The Highway System Maintenance System (Sinmac) repaired the road system affected by El Niño. The first stage of the process began around the end of August, the goal being to restore transit in the affected highways in a maximum of 6 months. The second phase complete reconstruction should begin in the second semester of 1999 and end in the year Employment Employment estimates for 1998 suggest that the economically active urban population representing 65.5 percent of working-age population and 30.0 percent of total population increased by 3.5 percent over the previous year, to 7.5 million people. Employment rose by people (3.5 percent) in TABLE 8 URBAN UNEMPLOYMENT AND UNDEREMPLOYMENT (In percentages) VARIABLES UNEMPLOYMENT 1/ By gender Male Female By age groups years years years and more By geographic area Metropolitan Lima Coast n.a Sierra n.a Jungle UNDEREMPLOYMENT 2/ By hours By income / Fourth quarter 2/ Third quarter of each year. The unemployment rate was 7.9 percent in the last quarter of 1998, up from 7.5 percent in the same period a year earlier. Breakdown of the unemployment rate by gender reveals that while the male unemployment rate increased, women fared better, as unemployment decreased from 9.2 to 8.5 percent of economically active women. Breakdown by age group shows that unemployment in the youngest segment of the working population 14 to 24 years increased, remained almost stable in the two next age groups 25 to 44 and 45 to 54 years and decreased for the eldest group. In terms of geographical areas, unemployment rose in Metropolitan Lima, the coast and the jungle, while it decreased in the urban highlands. 25

9 Urban underemployment increased during the year, from 41.8 percent to 44.1 percent. While underemployment measured in terms of hours worked decreased, underemployment measured in terms of income increased. The total employment index for manufacturing, commerce and services rose during the year in companies with a hundred or more workers. The overall index grew 1.8 percent, with employment in the trade and services sectors rising by 6.3 and 3.6 percent, respectively. Industrial firms in this group reduced the number of workers by 1.9 percent. 26