Peru Rebuilds Stronger

Oct 31, 2007

Peru's economy escaped relatively unscathed from a devastating August earthquake. The disaster may spur privatization and a telecoms shakeup.

More than 300,000 people were displaced by a severe earthquake that struck Peru over the summer, killing 595 people. The government has approved the first outlay of $32 million for reconstruction and received pledges of around $80 million from foreign governments and international organizations. The 2008 budget includes $204 million for the reconstruction of infrastructure damaged by natural disasters. Analysts estimate the final price tag could be two to three times higher.

Regardless of financial cost, the government is confident that the tragedy will not undermine growth. The 2008 budget forecasts GDP growth at a conservative 6.2%, down from an expected 7.2% this year. Exports rose nearly 20% through July, hitting $25.4 billion, tax collection was above 15% of GDP and inflation, while higher than last year, is still among the lowest in LatAm, at 2.8% year to date.

"Given the current good situation...

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