New Market Study Published: Peru Freight Transport Report Q3 2013

BMI maintains its broadly positive view on Peru's freight transport sector. We forecast real GDP growth to come in at 5.4% in 2013, a slight upgrade from our previous forecast of 5.2% due to our expectation that economic activity will remain relatively robust in the next few months. BMI sees favourable base effects effecting Peruvian exports in 2013, including the cyclical upswing in Chinese growth, some upside for metals prices in H113, as well as modestly stronger hydrocarbons production will boost exports this year. As such, we forecast export growth of 2.0% in 2013, up from -1.4% in 2012.

Full Report Details at
- http://www.fastmr.com/prod/648372_peru_freight_transport_report_q3_2013.aspx?afid=301

Meanwhile, we expect slowing domestic growth to weigh on imports, forecasting growth of 7.9% in 2013, down from 10.4% in 2012. That said, in line with our view for economic rebalancing in China, we expect export growth will remain well off its recent highs averaging 9.1% between 2013 and 2017, compared to 19.1% between 2006 and 2011.

We caution that with Chinese real GDP growth set to slow notably in the next few years, as the economy rebalances away from an investment-led growth model towards one in which private consumption plays a larger role, we believe that Peru will be hit hard through the trade and investment channels. As such, we maintain our below-consensus view on real GDP growth, as well as anticipating a wider current account deficit and further currency weakness in the next few years.

Headline Industry Data

* We expect growth of 5.0% in total tonnage throughput at the Port of Callao, to 20.33mn tonnes.
* We predict air freight volume to increase 6.6%, to 285,000 tonnes in 2013.
* We expect rail freight carried (volume x distance) to grow 3.1%, to 1.35bn tonnes-km in 2013.

Key Industry Trends

BMI Expects Peru Rail Freight To Go The Distance - BMI expects rail freight carried (volume x distance) to grow to 1.3bn tonnes-km in 2013. Over our forecast period to 2017 we believe the annual increase in freight carried will be 3%.

Terminales Portuarios Euroandinos Orders Cranes - The operator of the Peruvian port of Paita, Terminales Portuarios Euroandinos, has awarded a contract to Ireland-based crane manufacturer Liebherr Container Cranes for the supply of one super-post-Panamax ship-to-shore crane and two rubbertire gantry cranes.

Peru hunts UAE cash for giant logistics hub

Peru is seeking investment from the UAE for a planned major logistics hub on the Pacific coast and also hopes to convince Dubai's Emirates Airline to launch flights to its capital, the country's Economics and Finance Minister Luis Miguel Castilla Rubio has said.

Key Risks To Outlook

The free trade agreement agreed between Peru and Japan and the associated abolition of import tariffs on goods travelling between the two countries should increase trade flows between the two.

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