Peru: As long as we say we're growing, nobody minds

The headline is "Real Decline in Exports Masked"
(click to enlarge, Spanish language report)

Here's another exposé of the BS mathematics being used by Peru to pretend it's still growing. In its recent report, The Peru Central Bank (BCRP) admitted that export values had dropped significantly since the same time last year, but insisted that export volumes from the country has increased YoY by 0.2%. Now of course we know that export values have dropped significantly (just look at the prices for the metals), but it did seem weird that the BCRP was suggesting there's more volume traffic through Peru's ports right now, especially as anecdotal information from places like the main Callao seaport is that workers are idle and fear a round of layoffs.

So the revelation in Peru's La Republica this morning (see page above) from ace statsbuster Farid Matuk that the BCRP has been using a defunct stats baseline to calculate exports came as little surprise but welcome confirmation of the continued BS eminating from the Twobreakfasts government. According to Matuk, the BCRP uses a 1994 statistical index baseline to calculate exports, a database that was updated and made redundant in 1999 and then again in 2002. The BCRP should (if they actually cared about telling the truth) be using the 2002 dataset to make their calculations. And amazingly enough, by using the 2002 data the export volume results in a 7% drop YoY, not the 0.2% fantasy proposed by the bankers.

Still believe that Peru is "diffferent", is "armour-plated" and is "protected from the recession" like some fantasy island of love and harmony? Wanna buy that bridge of mine? The quotidian lies of the Twobreakfasts administration don't come for free, unfortunately. The ongoing deception of these people, as they try to lull Peruvians to sleep and get the world's applause as WonderCountry'09 is only pushing Peru closer to a nasty hard landing. Reality will bite eventually. It always does.

And on the subject of Peruvian economics.......

....the Peruvian Central Bank's (BCRP) newly revised forecast for 2009 has some very strange assumptions. This report from Reuters lays out the general scenario, but the key changes are:

• Domestic demand down from 7.1% to 5% growth
• The projected fiscal surplus of 1.1% is now a fiscal deficit of 1.0%
• Export growth down from 6.2% to 1.9%
• Import growth down from 9% to 2.1%
• Inflation down from last year's posted 6.65% to a forecast of 2% in 2009
• The GDP growth forecast is unchanged, staying at 5%

If this isn't bistromatics of the highest order, I'm Chinese. And I'm not Chinese. Look, even taking the BCRP's own metrics don't you think that simple logic points you in the general direction of saying "This is BS, dude"? Seriously, how can domestic demand, imports, exports and inflation all drop and the GDP forecast stay the same? And that's only the start of things, really. Here's a chart showing Peru's exports in the period 2005 to February 2009:

Please note the Feb 2009 figure is the total and not broken down into
mining/non-mining parts as the figures are not yet available at BCRP

Can you seriously tell me that Peru is going to beat its 2008 export total this year? Even Carranza's Finance Ministry recognizes that exports will drop from around $32.47Bn to around $28Bn this year (which is also exaggerated imho, it's more likely around $25Bn), so I'd be interested in finding out what BCRP top cheese Julio Velarde was smoking when he came up with a 1.9% YoY export growth prognostication. To labour the point, Peru is staring a 15% to 20% drop in exports in the face, not 1.9% growth.

It's the same story with imports, of course. Growth in 2009? Oh c'mon guys, at least make your bullshit survive more than a cursory glance at reality.

Click to enlarge charts

It does make me wonder what Velarde is trying to achieve here. I actually basically respect the guy and know full well he's not a klutz. Perhaps by making such outrageous claims he's trying to send a signal to people that look further than the headlines in El Comercio. Perhaps he's trying to say "Twobreakfasts is making me manipulate the GDP number, so I may as well make them look as silly as possible". I'm just trying to find a thread of logic where there is none.