Dr. Doom is Bullish on Peru!

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tupacperu
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Re: Dr. Doom is Bullish on Peru!

Postby tupacperu » Sat Jan 11, 2014 8:02 am

Alpineprince wrote:
tupacperu wrote:I am not making this stuff up to be DAN-DOWNER.
The economy is not as brilliant as it use to be.

Even the estimates have been revised down.
UPDATE 2-Peru central bank cuts 2013, 2014 growth forecasts again
Fri Dec 20, 2013 2:21pm EST
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LIMA, Dec 20 (Reuters) - Peru's central bank slashed its official forecast on Friday for economic growth this year to 5.1 percent from its September forecast of 5.5 percent.

In its quarterly report, the central bank also revised down its estimate for economic growth in 2014 to 6 percent from 6.2 percent.

The central bank has trimmed its growth forecast several times this year as the Andean country's key mineral exports have tumbled on weak prices and softer demand, and domestic demand has slowed.


Oops, I guess we are accelerating again!


Lol... This is an estimate for next year which has already been revised down. Right now just spinning your wheel, 1st Q of 2014 is a few months off.


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Re: Dr. Doom is Bullish on Peru!

Postby chi chi » Sun Jan 12, 2014 5:16 pm

tomsax wrote:My guess is that the economy of Peru will continue to grow. From my past experience of watchinng the economy of Peru, the longer you wait for the economy to overheat and make a correction the longer it will continue to grow quite nicely. If a crash ever happens it will be when everyone has their eye off the ball and thinks a correction will never happen. My plan is to buy when tupacperu stop posting about its immiment demise.


The more the economy grows, the bigger the gap between rich and poor will be.

Some people benefit from the growing economy but the majority will stay behind in shantytowns and struggling to make ends meet.
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Re: Dr. Doom is Bullish on Peru!

Postby Guiri » Tue Jan 14, 2014 2:02 pm

tupacperu wrote:
Last I learned in math 101
8.8 to 5.1 is decreasing, not growing.

Mmmh...You probably missed that class :D 5.1 % of INCREASE is still increase or not :wink:
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Re: Dr. Doom is Bullish on Peru!

Postby tupacperu » Tue Jan 14, 2014 2:44 pm

Guiri wrote:
tupacperu wrote:
Last I learned in math 101
8.8 to 5.1 is decreasing, not growing.

Mmmh...You probably missed that class :D 5.1 % of INCREASE is still increase or not :wink:


Guiri: Deceleration = decrease / Acceleration=increase :)
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Re: Dr. Doom is Bullish on Peru!

Postby tupacperu » Wed Jan 15, 2014 10:29 am

GDP results for Nov 2014:

It grew but less than expected.. more disappointment:
Peruvian economy grew 4.81% in November, lower than expected by the MEF figure announced INEI
The result is below the 5.1 estimated by the Ministry of Economy and Finance.
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Re: Dr. Doom is Bullish on Peru!

Postby tomsax » Wed Jan 15, 2014 1:16 pm

tupacperu wrote:GDP results for Nov 2014:

It grew but less than expected.. more disappointment:
Peruvian economy grew 4.81% in November, lower than expected by the MEF figure announced INEI
The result is below the 5.1 estimated by the Ministry of Economy and Finance.


Yes, the rate of growth is not as high as previously expected.

But still growing. And still growing more than probably around three quarter of all countries in the world. Peru is still getting richer but just not getting richer at the rate people previously predicted (which was very high relative to other countries). It's still getting growing faster than in the US, Europe etc.
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Re: Dr. Doom is Bullish on Peru!

Postby TShadow » Wed Jan 15, 2014 2:20 pm

Some days ago they were discussing this fact in TV. Don't remember the name of the economists who were talking, but they said that a growth of less than 7.1% in Peru does mean that the rate of poverty will not decrease very much anymore.

They also said that you can't compare the growth of a country like Peru with the growth of USA or Europa. Actually one of the countries with the biggest growth is Mongolia with more than 18% because of the exploitation of abundant silver, gold, uranium and coal reserves in the vast steppes of the country. But countries which are growing like this and will not invert in infrastructures, education, industrial growth and also rely a lot on internal consumption will eventually sooner or later collapse.

They also predicted that Peru is a perfect candidate for such a scenario, the question is not that it won't happen but when.
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Re: Dr. Doom is Bullish on Peru!

Postby Guiri » Wed Jan 15, 2014 6:30 pm

tupacperu wrote:
Guiri wrote:
tupacperu wrote:
Last I learned in math 101
8.8 to 5.1 is decreasing, not growing.

Mmmh...You probably missed that class :D 5.1 % of INCREASE is still increase or not :wink:


Guiri: Deceleration = decrease / Acceleration=increase :)

The terms are familiar to me but you still dont get it ..nevermind :roll:
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Re: Dr. Doom is Bullish on Peru!

Postby tupacperu » Thu Jan 16, 2014 11:23 am

After reading the results of the GDP on 1/15/2014 for November 2013, one thing was left out; domestic demand was the main driver of the economy in the past, but now is sorely missing. There is still an emphasis on mining which Peru cannot control the volatility of the commodities market.

Interesting article today by Carlos Parodi - Economista at UP .

Peru thinks by extending and easing credit will produce a higher growth rate and boost the economy.

Do you think the credit boom of recent years is a potential threat to Peru ?
In recent years , credit has clearly grown much more than income.
This is different in a time of strong growth in a time of slowdown. The Peruvian economy has been slowing since 2010. So what might happen is that if revenues grow slower reaction to falling and credit is not slow , then will come a time when people will not be able to pay what you owe via credit cards or other instruments .




"It is not good to stimulate the economy with more credit to people ," says Parodi
Thursday, January 16, 2014

ECONOMÍA09 : 45
If revenues will grow slower by the slowdown , and credits left unaddressed , will come a time when people can not pay their debts , said economist UP referring to the expansionary measures the Central Bank.

luis.alegria @ diariogestion.com.pe

The Government estimates a growth of 6% for 2014 What is your assessment ?
The source of this estimated growth is the implementation of a number of mining projects, primarily copper . However, we are subject to world copper prices and physical demand from abroad, coming from China.

China is not going to grow at rates of 10% , which ensured us a strong entry into mining. This year is expected to grow to a maximum of 8%. We do not handle global demand for copper and its price, so there is no certainty about that 6% .

In summary , the expected growth basically depends on mining, we have a situation of external gap and these imports are based on credit. The government is committed to grow with copper related projects , but that means it has the external demand for copper (which would come from china) and has a friendly environment for foreign investment for these projects go .

So we really can achieve that 6 % estimated by the MEF ?
I do not think we achieve 6%. I think we'll be between 4 and 5 % this year. If you look at the figures the global economy is slowing . Moreover, U.S. already started to reduce the economic stimulus and Janet Yellen has announced it will continue that reduction , which is likely the U.S. slows and is the main buyer of Chinese goods . With that, China would grow a little less and would require fewer raw materials , including copper from Peru .

Which sectors will drive growth this year ?
Hard to say for now, but as the government expects , mining would have to recover. Consider that probably displays with relatively high growth because you are going to compare with a rather low figure .

I think construction will grow less than 10 % in any case, because credit is reaching a limit and excess housing supply is causing prices they stabilize , and even gradually decreasing .

Agribusiness is not very clear because it basically oriented to Europe and USA Services sector would be moving more than the economy this year .

Do you think the credit boom of recent years is a potential threat to Peru ?
In recent years , credit has clearly grown much more than income.
This is different in a time of strong growth in a time of slowdown. The Peruvian economy has been slowing since 2010. So what might happen is that if revenues grow slower reaction to falling and credit is not slow , then will come a time when people will not be able to pay what you owe via credit cards or other instruments .

But monetary expansion lowers the BCR just credits ...
I think not for stimulating the economy with a higher credit boom in times of slowdown, because the only thing that grows is the debt of the people . Then , as the economy slows therefore have less income, then they will not have to pay and how defaults will begin to rise.

Do policy makers are prepared for surprises?
Both the MEF as the BCR have the tools, but the problem is that they are playing with a difficult external environment , increasingly complex . In 2012 and 2013 it was possible to hold the tools of both, but the issue is whether you can expect these tools to keep the economy moving forever. Probably better than the Peruvian economy used to grow between 4 and 5%, which is not bad.

What explains this ' obsession ' with the growth rate of GDP ?
We must understand that the highest growth between 2006 and 2008 was due to the boom in mineral prices. After that boom have to get used to move at a slower pace, which does not have to be bad.

The problem is that, as things have arisen , that is influencing much lower growth in expectations. The investor is thinking that is growing less and that creates self-fulfilling prophecies : if it is less dynamic , people invest less and the economy will stagnate .

So it is better to be realistic and say that we should grow sustainably and stably between 4 and 5 % , a pretty respectable rate .

If the slowdown deepens, should any further reduction in the rate of BCR reference ?
If more liquid is injected at this time , the only thing that is going to revive consumption. And that is not sustainable. The recovery must be through greater private investment and public investment as a supplement. First investment, then the consumer and not the reverse .

I think any measure aimed at encouraging consumption is to begin by the end. I insist that a higher dose of realism missing . You have to look over the sustainability of the accounts in the future and try , although it seems difficult start making reforms.

Besides credit , is there any other items that may cause a problem in the economy?
I think there are two risks that are tied together . One is credit , it is one of the main . But above all , the risk of people who are indebted in dollars and gain in soles , which is no small proportion of the population .

Following the announcement of ' tapering , anyway it did raise the exchange rate?
The exchange rate - according to all analysts - have an upward trend due to the tapering effect this year.
When combined with the Chinese slowdown, you'll have a lower dollar inflows from exports and the U.S. side , then the exchange rate would rise . It is a ' combo ' .

So really all risks are having a ripple effect ?
The Central Bank says it has tools to inject liquidity into the economy if there is more slowdown. However, if low rate and increase appropriations , again entered the credit problem .

What I believe is that this has to be seen in a more systemic way and tie together all the factors , because the lower growth also generates a lower rate of increase in tax revenues shrinking surplus and that the Peruvian government .

Whereas the side effect of a monetary expansion , does the BCR should create new policy instruments ?
Exactly , the BCR should think of new tools to stimulate the economy more directly . But you have to think that the role of BCR is not boost growth, but their only goal is to achieve an inflation rate between 1 and 3 %. Who is responsible for the growth is private investment , but to flourish you need a more friendly business environment less stable and more favorable external environment.

What should be the role of SBS to help ensure that this does not become a problem?
The SBS would have to place certain restrictions on the granting of such a massive credit card , for example, is happening. While some measures have been taken , what the actual issue is that financial institutions are providing credit cards by phone .

So I think the SBS must control a bit more and better institutions , to regulate the credit because you have the tools to do so.

What are the prospects for private investment this year?
In general, private investment in the fund is a matter of trust. I see very little progress in this field and I am not very optimistic for 2014 , because the government is trapped in other political difficulties that make it much
damage.

I think a very important step that the state would try to solve their own political obstacles . The best signal you can give is a President with a clear direction , clean political issues and I think that if some of that is accomplished , we can grow a little
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Re: Dr. Doom is Bullish on Peru!

Postby tupacperu » Thu Jan 16, 2014 11:43 am

Guiri wrote:
tupacperu wrote:
Guiri wrote:
tupacperu wrote:
Last I learned in math 101
8.8 to 5.1 is decreasing, not growing.

Mmmh...You probably missed that class :D 5.1 % of INCREASE is still increase or not :wink:


Guiri: Deceleration = decrease / Acceleration=increase :)

The terms are familiar to me but you still dont get it ..nevermind :roll:



we can play the game of semantics all day. but that does not take away the fact that the economy is in deceleration.

Investors are finicky, if I were getting 8% in 2010 on my investment and my investment falls to 4%, I'd be looking for another place to put my money.

QE has been lowered by 10 Billion, but the FED did not tamper with the interest rate. At some point the low interest rate will have to be addressed. That is when investors will begin to repatriate their $$$.

If you are satisfied with 4% growth, then fine, but there is big doubt that Peru can grow the economy solely via mining projects. Personally from reading the economic rags, I do not see Peru moving to diversify. Peru is attempting to speed up mining projects to pump up the GDP, when they should be looking to move into a finished goods economy or a service industry to sustain growth.

If a 401K was growing at 8% per year, but dropped to 4%, there are not too many more quarters of 4% that you are willing to accept before you adjust your investment.

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