Peru's President Touts Economy After Protest

by
Reuters
Peru's economy has the tools to continue growing even as an era of high metals prices ends, President Ollanta Humala said on Sunday, a day after the largest protest of his two-year term.

* Economic strengths: reserves, low debt, middle class

* Humala faces scandal in Congress, street protests

Peru's economy has the tools to continue growing even as an era of high metals prices ends, President Ollanta Humala said on Sunday, a day after the largest protest of his two-year term.

He said the strengths of Peru, a top global metals exporter whose once red-hot economy shows signs of cooling, include a low debt level, a rising middle class, and $67.5 billion in reserves, or a third of the country's gross domestic product.

"There are signs that the cycle that favored our economic growth has come to an end, and we must defend ourselves," Humala said in a speech to Congress on Peru's Independence Day.

Peru has been a favorite among investors for its swift growth, but even the Andean tiger has started to feel some impact from slower growth in China and the United States, top buyers of Peruvian exports like copper, gold and silver.

Peru's economy expanded 4.96 percent in May from a year earlier, the second slowest monthly GDP figure of the year and well short of the 7.7 percent annual expansion recorded in April.

Humala said growth in the second quarter of this year would likely be around 6 percent.

"Peru is still one of the fastest-growing countries in the world," he added.

His government's growth forecast for 2013 is 6 percent, compared with 6.3 percent achieved in 2012.

Exactly two years into his five-year term, Humala, a one-time leftist radical who surprised Wall Street by governing as a moderate, faces large protests and an approval rating of 33 percent, his lowest to date.

Critics say a decade-long economic boom has not done enough for the 25 percent of Peruvians still living in poverty, and 5,000 of them marched in downtown Lima on Saturday.

Although the recent protests pale in comparison to those in neighboring Brazil, Saturday's march was thought to be among the largest in Lima in a century and police broke it up with tear gas when participants tried to enter Congress.

A much smaller crowd gathered on Sunday.

Humala reiterated a commitment to advancing social programs and strengthening the political system in his annual address, though he did not make any direct references to the protests.

"We have made progress, but there is still some housekeeping to do," he said. "We need to strengthen democracy and its institutions."

His image has been hurt by a scandal that rocked Congress last week and brought the strength of Peru's political institutions into question.

Lawmakers rescinded long-overdue appointments to the country's top court and the human rights ombudsman after audio tapes revealed the appointments were made not according to merit but rather to appease various political parties.

"We should be pleased we have not lost the ability to learn from our mistakes," Humala said.