By Ryan Dube
LIMA, Peru--Peruvian President Ollanta Humala tried to reassure
investors on Monday that the country's economy will rebound after
signs that a decadelong boom is fizzling out.
In his annual state of the union address, Mr. Humala said the
government is taking the necessary measures to ensure that Peru's
economy will continue to be one of the strongest in the region.
"Beyond the variations in the rates of growth, Peru is a country
that has strong macroeconomics," said Mr. Humala, who completed
three years in office on Monday. "At the end of our government,
[Peru] will be the country with the strongest growth and lowest
inflation in the region."
Peru has had one of the best economic performances in Latin
America during the past decade, but economic activity has stumbled
recently because of lower commodity prices that have hurt mineral
exports and private-sector investments.
The country's gross domestic product expanded 1.84% in May, 2.0%
in April, 4.9% in March and 5.7% in February. Earlier this month,
the Central Reserve Bank of Peru cut its forecast for economic
growth this year to 4.4% from a previous projection of 5.5%, on
lower-than-expected growth in the second quarter.
Private sector economists have also lowered their growth
outlook. The latest central bank survey of 20 economic analysts
found that Peru's economy is expected to grow 5% in 2014. The
economy expanded by 5.8% in 2013 and 6.3% in 2012.
Bank of America Merrill Lynch said in a report Monday it expects
Peru's economy will still grow faster this year than the regional
average of about 2%, but "it will no longer be one of the
fastest-growing economies in the region."
The government has implemented measures recently aimed at
boosting growth by shoring up private investments, including
relaxing environmental rules to speed up the approval process for
permits.
The government approved a number of new measures Monday,
including providing more liquidity to construction companies to
increase real-estate projects and a plan to diversify the economy
by reducing Peru's dependence on its important mining sector.
Production Minister Piero Ghezzi told reporters that the plan to
diversify the economy will help Peru post annual growth rates of
about 7% in coming years.
"The Peruvian economy has for many years depended on the mining
and energy sectors a lot, and now that the economy has fallen in
terms of growth we are propelling new motors in the economy," Mr.
Ghezzi said. He said the plan will take time to implement, without
providing further details.
Finance Minister Luis Miguel Castilla said that the economy will
start to show signs of a recovery in the fourth quarter of this
year thanks to the stimulus measures, as well as an expected
improvement in mining output and the start of construction at large
infrastructure projects.
"Starting in 2015, [annual] growth should remain above 6%," Mr.
Castilla said.
Write to Ryan Dube at ryan.dube@dowjones.com