The world's tallest building in Dubai: What you really need to know

My thanks to reader KL for sending the link to this fascinating article over at Capital Chronicle. It seems that every time a city or a country breaks the record for the world's tallest building it is immediately followed by an economic downturn. Impressively, the 'winning streak' has been going for over a hundred years.

I'm not going to paste or steal from the article, because it's unfair to take away from such a good piece of detective work and the author deserves your eyeballs at their site. So go look for yourself.

More on Peru's economic miracle (and owls)

The INEI stats office has just published the July 2009 GDP figures. According to the normal Reuters poll analysts* expected a drop of 0.5%

The actual result?: a drop of 1.38%

Yet again, manufacturing (i.e. the real economy) dropped badly by 12.35%

Expect Spongebob Carranza to say that "we're at the bottom" AGAIN and expect our friend the owl to pop up and reply with a cheery

Here's the official INEI bulletin.

*dumbasses in suits

Checking in on the Peruvian consumer

Here are two charts with stats taken from this INEI bulletin. They show how Peru's national sales tax receipts have been coming on recently in Peru. The first chart shows receipts in monetary terms, month over month, since 2007. The growth has been pretty impressive.

However this chart shows more clearly the recent weakness in the growth pattern, with last month the first time that sales tax receipts have shrunk on a YoY basis.

So what happens if a country announces an economic recovery and nobody shows up for the party?

That Peruvian economic miracle in numbers

Yes indeedy, a true miracle! Peru 2009 is the only country ever in the history of ever everness to have seen its electricity consumption drop and claim GDP growth. The red line shows monthly electricity demand in Peru, and especially for those tuning in from El Comercio, that broken line is what's known in the trade as "a trend line".

Hallelujah!

These jokers still claim a +0.34% GDP growth rate for Peru. Seriously, do they think we have pelotudo tattoed on our foreheads or something?

Of course, the BSsers in the Peru admin couldn't even let this moment pass without trying to massage the numbers. Even though demand was down 2.95% YoY (Jul '08 to July '09) the press releases didn't bother mentioning the important figure and decided to note only electricity production, which was down 'just' 2.4%. Hell, y'know you could produce double the amount you needed if you like*, the real pointy end of the statistics is how much is used and not how much is made. You can't stockpile a gigawatt, y'see. You need to be the obsessive numberwonk type (errr...none of them round here...ahem cough cough) and get busy on the MEM website to find the true non-spin disaster area that is Peruvian electricity consumption in all its glory.

Economic miracle? Yeah right.

UPDATE: Reader 'PV' wrote and asked about the correlation between GDP and electricity demand, so check out this chart.


It's not an exact correlation, but that mainly because monthly GDP data collection is not very accurate and in the case of Peru is affected by the number of working days compared to the same month of last year (e.g. where Easter falls will affect the monthly reading quite markedly). However, although not a perfect fit it's still not bad; it's clear that there's a correlation between the two sets of figures. Hey, I bet you can't wait for Peru's July 2009 GDP number to be announced! That'll be out mid-September and we're bound to hear Spongebob and his "we're at the bottom" baloney yet again.


*well you can't, but you could churn out an extra 10% or so

Peru's economic liars: A primer for those who need to get up to speed

It has been brought to my attention that certain higher-traffic bloggers and financial commentators who were plug-dumb enough to buy into the "economic miracle" bunkum and lies spread by Peru's government and central bank lackeys (ably helped along by the dumbasses in suits at the IMF and World Bank) and were silly enough to regurgitate official numbers to their innocent flocks of readers have recently discovered IKN and are beginning to wake up, smell coffee and recognize they've been hoodwinked*.

And thus for their benefit, your humble correspondent has thrown together this little primer on the lies spread by this most pathetic of governments. First let's take in the figures in question via this chart:

And now let's hear what we've been told all this time:

January 19th: "Minister Carranza acknowledged the strength that characterizes the Peruvian economy....with a projected growth rate in 2009 of at least 6%. "

March 8th: "The results obtained from the leading indicator studies estimate an increase (of GDP) of 4.5%, 3.0% and 3.9% for the months of January, February and March 2009, respectively." (Peru official INEI stats office)

April 16th: Commenting on the February 0.17% growth rate registered, Carranza said, "February has been atypical and has been a pothole...additionally the impulse from the finance sector will show in the second quarter of the year."

May 5 2009: ""We likely hit the bottom in the first quarter, and we should see a stronger recovery in the second quarter," he (Carranza) told Reuters."

It goes on and on, with each and all this time your humble correspondent laughing tragic laughs and explaining how much bullshit is being spread by these unclothed emperors. Then finally, after half a year had gone by, some of the dumbasses in suits who fell for this crap for month after month up in gringoworld started seeing reason.

August 3rd: ""The lack of recovery signs following the first half 2009 growth collapse has many increasingly skeptical of Peru's growth story," said Merrill Lynch in a report Monday. "

But it's not just Spongebob Carranza, either. Goes without saying that Twobreakfasts is BSsing (his only talent), but as another example Peru's foreign trade minister Martin Perez is quoted in Newsweek as late as July 30th as saying:

" As a result of these actions, during the first half of the year, Peru's economy grew 0.9 percent. Martin Perez, Peru's minister of foreign trade and tourism, told Bloomberg he expects GDP to grow between 2.5 percent and 3 percent this year.

"Exports have suffered around 15 percent but the stimulus package the government has passed is trying to bring forth internal demand," he was quoted as saying by the magazine."

Now we can argue the toss about Peru's final 2009 figure if you like (for the record, he's still aiming high), but there are not one but two factually proveable incorrect statements in that short passage. Firstly, Peru's economy grew 0.34% in the first half of 2009 according to govt figures (that are also BS and way high) and not Perez's 0.9%. Secondly Perez says "exports have suffered around 15%" which is a barefaced lie. Peru's exports dropped 29.66% in the period in question, nigh on double Perez's balderdash. Again, official numbers. And as I hear you asking "what difference does it make anyway, Otto", let me tell you; that 15% understatement makes for two point four billion dollars in exports, or around 2% of Peru's GDP.

These people are liars. Plain and simple, look at the evidence above. This is the country that has a foreign trade minister overestimating foreign trade by $2.4Bn in Newsweek and because it's Amerika's friend nobody bothers to fact check, nobody questions, the nodding donkeys nod their heads and the moving finger, having writ, moves on. Meanwhile, here follows one segment from a whole plethora of posts at IKN that nailed the real story months and months ago. March 16th:

But don't let that worry you, because Twobreakfasts says it's going to be 5% this year, and Carranza says 5% this year, and the Central Bank says 5% this year, and the IMF says 5% this year. I mean, why on earth should you listen to me and ignore all those utterly reliable and impartial sources?

Therefore, the latest story from Spongebob is that Peru's GDP will grow by 2.5% in 2009 and will see "important improvement" to 5% in 2010. Are you going to take him at his word this time? Fool me once, shame on you, fool me twice..............

Moral of this story: Be they your local mayor's office, your own country, Peru or LatAm or Asia or anywhere else you like, politicians do not tell the truth. However the mass hypnosis created by battering out the same "Peru miracle" story from all sources and feeding it to a compliant and brainless media means that the same lies and bullshit pervades into the financial commentaries of those with serious influence that are either 1) too stupid to work it out for themselves or 2) too lazy to bother checking the figures themselves before spreading the BS on. Yeah, that means you, "T"**.


*That was a mouthful of a paragraph, wasn't it?
**Before you mail and accuse me of bolshiness again note that I'm not naming you; my pathetic way of being nice, as I think you're saveable re LatAm.

The LatAm GDP beauty contest

Know your history, dudes...

And the winner is..........

MEXICO, with a drop of 10.3% in its GDP in 2q09.

Second prize goes to...

CHILE, with a 4.5% drop in its GDP in 2q09.

And third prize is awarded to....

VENEZUELA, its GDP dropping 2.4% in the same second quarter period.

The message was brought to you by IKN, bringing context to Venezuelan figures you'll see bandied about on their own for the rest of 2009.

Top note on Peru from Reuters

HT to Justin Delacour at LANR for the headsup on this report from Terry Wade at Reuters. He nails the story here and even points out at the end that Bolivia will grow faster than Peru this year....that's pretty readical stuff for MSM right now, but it'll be getting more airtime as the year closes out, that's for sure.

Dudes, I've been telling you this all along but now it's getting some official, bigmedia airtime. Here below is how the Reuters story kick off, but click through for the rest as it's all good stuff. Meanwhile, for those of you versed in the language of Cervantes that want to get nittygritty on the latest numbers, this report from Farid Matuk is well worth your time. Meanwhile here we go with Reuters:

ANALYSIS-Peru's hopes of being an 'Asian tiger' fade

Less than a year ago, Peruvian elites smugly began calling their country a 'Latin tiger' and predicted that it had entered a magical phase of constant economic growth that would outshine the rest of Latin America.

A leading minerals exporter, it grew every year for the past decade and capped off the heady days of 2008 with a 10 percent surge as China bid up global metals prices. But this year, Peru will be lucky to expand at all. The slowdown has been sharper than forecast and exposed the country's overreliance on raw materials exports, with minerals making up 60 percent of all overseas sales. Unlike 'Asian tigers' such as South Korea and Taiwan, which boomed as they became manufacturers of everything from cars to microchips between the 1960s and 1990s, Peru's economy still largely depends on the cyclical whims of commodities prices and exports have plunged 30 percent since December. Most economists say Peru will grow less than 1.0 percent this year, and the government appears to be backing away from its downwardly revised forecast of 3.0 percent..............

CONTINUES HERE

Chile's car sales

July's figures for new auto sales were just released by the Chilean car honchos ANAC, so it's a good moment to catch up on what's been happening to that sector in the country. In places where consumer stimuli on auto sales hasn't been used to any great extent (Brazil has been running a successful campaign on that score all year, way before 'cash for clunkers' was invented by Obama&Co), new auto sales are a good way to get a thumbrule idea of the way the consumer is acting in any given country. In the case of Chile, there's good news and bad. First the good, and new auto sales have been picking up as the year progresses.

ANAC originally put its estimates for 2009 at 130,000 units, but they've bumped that up to 140,000 on recent numbers (Chile's sales tend to increase month after month during the year, peaking in November)

But the bad news is the longer view. The 140,000 units forecast for 2009 sit like this compared to previous years.

And that's quite a drop, dudettes and dudes. Chile isn't rotating its new cars this year, with plenty of consumers driving their present car another few thousand miles instead of trading in. It's called a recession, something that Chile hasn't denied suffering for the last year. Evidence above.

More downward revisions for Peru

And this time it's Spongebob and his band of liars at the Finance Ministry itself, downgrading to "between 2% and 3%" as reported by El Comercio last night. The downgrade will become official at the end of the month (when it'll probably be called plain straight 2%).

So let's look at how the official finance whores have forecast Peru 2009 so far in chart form. Now, I dunno 'bout you dude, but I kinda notice a trend developing...........

We do ornery (click to enlarge)

Otto, purveyor of an honest GDP forecast for all this time (1.28%) , guarantees further BS and downgrading as 2009 winds down. You seriously expect these people to be honest with you after that kind of track record?

Meanewhile, the pre-empted excuses for this month's disaster number (about to be published...should be a lotta fun) are already rolling out. This latest one made me laugh, the headline saying "According to analysts, economy fell 2% in June due to social protests". Y'see it isn't the Twobreakfast/Spongebob show that's at fault, oh no no no no no; it's those lousy commies that protest over nothing. But they can dress it up any way they like; Peru is falling further into recession on their watch, period. Truth beats out lies eventually.

Does Otto work for BBVA Banco Continental? Should Otto work for BBVA?

Strangely enough, today BBVA Banco Continental adjusted down its forecast for Peru's 2009 GDP to +1.4%. Here's the section (translated):

BBVA Banco Continental forecasts that the Peruvian economy will grow 1.4% in 2009 and expects a rate of +3.3% in 2010.

So let's check that chart I put together back in April again...



...oh looky, Otto said +1.28%. And that was the time when Spongebob and all at the Peruvian Finance Ministry said growth would be 5%, Twobreakfasts assured his masses 5%, the World Bank said 5%, the IMF said 5%, BBVA was saying 5% (or thereabouts) and the freaking Peruvian Central Bank swore blind that it'd be 5%. It's also the time of year that commentators like Luchillo (who pretended to be an economist from chile living in Lima) would troll this blog and tell me that I must be some kind of insurgent communist for standing up and saying "They are lying to you". How do you feel now, dumbass?

It only remains to ask whether I actually work for the bank in question (the answer being "hahahahahahahahahaaaaaaaaaaa") or whether I should work for BBVA in the future (the answer being "no way José; I'd last a week at best). Y'know, yesterday I was accused by somebody who thought he was being friendly of being too mouthy on this blog. But hey, when the whole of the financial community expects 5% growth from Peru and I'm here all year saying that's a very large crock, at some point I have the right to stand up and say "toldya so". And there's never going to be an editor here, no matter what people would like to see. If you don't like reading plain speak spoken plainly and an author that is not afraid of the truth and its painful consequences there are a zillion other corners of cyberspace to choose from. No need to return here.

US employment figures: Jack Crooks of Black Swan Capital said it best this morning

Here's the link (good free daily letter, by the way. Sign yourself up) and here's the quote (that was written before the number hit, btw):

I ask now: will the jobs report really tell us anything? I mean, will it tell us anything besides the fact that fewer jobs were lost this month than last month? It’s like telling a car accident victim before the paramedics arrive that he lost less blood this last minute than he did the previous minute.

Oh wow! English language media is starting to get the picture about Peru, too.

The WSJ (via DJNW) is running the story "Peru's Intergroup: No Signs Of Strong Economic Recovery" today and it starts like this:

LIMA (Dow Jones)--Peru's economic recovery will continue to be subdued, although a "mild" rebound is expected in the second half, Intergroup Financial Services Corp.'s (IFS.VL) chief financial officer said Wednesday.

"We are still not seeing strong signals of a recovery," said Jose Antonio Rosas in a conference call with analysts, adding that increased government spending will help boost growth.

Peru's gross domestic product rose close to 10% last year, while in the first five months of this year GDP has expanded by only 0.83%. CONTINUES HERE

For the record Intergroup is the holding company for Interbank, a pretty decent Peruvian high-street banking chain. So what this is is the start of a bit of reality, not much more. My eyes popped out on seeing the adjective "only" as regards Peru's GDP, cos it's the first time I've seen even a mildly derogatory comment about Peru's lop-sided, socially disgraceful "growth" in five years of MSM-watching. So suddenly the voice of English language mainstream media has changed from "Peru Economic Miracle" to "Peru flat for year", so what are they going to say when the next GDP figure comes out way, way negative?

The fruitfly analyses continue in other places however. RGEMonitor (the Roubini place full of the dumbasses in suits that you call economists) is still peddling the party line, as found in my inbox this morning:

A couple countries in Latin America have thus far been able to weather this crisis better than their neighbors. Brazil and Peru stand out for their relatively healthy fundamentals and financial systems. Both countries have benefitted from being relatively closed economies and from having diversified export markets and products.

This is BS. Brazil has an internal economy, but Peru is wholly dependent of the rest of the world and metals prices. The crap spouted by S&P last year wasn't confined to AAA ratings on US financial roadkills, as I still recall the day I guffawed non-stop about its call on the "surging internal economy of Peru" as it justified the worst ever 'investment grade' rating in the history of developing markets. Peru's single major export market is the gold that gets sent directly from Chicama and Yanacocha to vaults in Switzerland. Then comes copper to Asia and that's all she wrote, its about as diversified as the recipe for hotdogs. Not long now til the emperor is shown in his birthday suit and the arrogant know-alls at RGE eat their words, side order of crow. Short the Nuevo Sol.

Related Post: Will Spongebob Carranza resign in disgrace as Peru slips further into recession?

Peru: Will Spongebob Carranza resign in disgrace as Peru slips further into recession?

When the last set of Peru GDP figures hit in July, FinMin and Liar Spongebob quickly came out and said that the economy "had touched bottom" (samo samo he's used all year) and said that the first half of 2009 would finish around +1%.

So inquiring minds would like to know whether Carranza will finally admit his policies have been utterly ineffective and that his constant overestimating bullshit has led his country up the garden path if the latest Banco Continental forecast of a Peru GDP downturn of -2% to -2.4% in June (the official number is expected out mid August) is proven true. According to the report:

"The Economics Studies Service of BBVA Banco Continental projects a fall in June GDP of between 2% and 2.4% after the poor performance (figures) of the primary and manufacturing sectors."

Such a figure would put Peru's GDP at around -1% negative growth for the first half of the year, a mile away from Spongebob's +1% for the first half of the year, a million miles from his 3% yearly forecast (that was as high as 5% in March) and a quadsquillion miles away from the total demagogic piffle spouted by Twobreakfasts late last year when he forecast Peru's 2009 as +6.5% and that his country's economy was "armour plated" against the world financial woes.

While we're at it, that 5% GDP figure mentioned by Carranza in March found its way into this IKN post at the time. A humble blogger like me calling bear on Peru all year against the world's economic brains calling "Peru economic miracle", so let's see now........

"... Twobreakfasts says it's going to be 5% this year, and Carranza says 5% this year, and the Central Bank says 5% this year, and the IMF says 5% this year. I mean, why on earth should you listen to me and ignore all those utterly reliable and impartial sources?"

Nuff said. I am available for hire or autographs so Spongebob, feel free to mail me you dumbass. You were a random walk FinMin who got lucky and did nothing during your first stint at the job, then actually bought into the BS they wrote about you. Fact is you're a zero, a liar, an emperor with no clothes and a knownothing. Resign and put us out of our misery.

Peru: Can I Haz Scotiabank Job?

It must be a truly great thing to land a job as an economist in a Peru bank. Two main reasons:

1) If you have a brain there's no competition

2) Say what you have to say in the right way and you get quoted everywhere by the lapdog press. World of Ego, here we come.

Case in point, Pablo Nano of Scotiabank. Señor Nano yesterday predicted that Peru's trade balance would come out positive in June, which is largely along the lines of predicting that the sun will rise tomorrow morning or that the current Pope is of the same religious creed as the previous incumbent Holy Father. What you have is a rapidly shrinking economy and deflation on one side (imports down? Duh!) and a rebound in metals prices as China buys up all that lovely copper and Switzerland squirrels away as much gold as it can get from Yanacocha and Pierina. Or in the words of Pablo, "The May numbers show on the one side a sustained recovery in exports and on the other a larger than expected drop in imports". No shit Sherlock.

And sure enough, today's imports numbers confirm that Peru's real economy is diving into an ever deeper recession. YoY imports are down 39.6% (really..not joking), with the worst affected sector that of capital goods and construction materials, down 44.9%. That makes the first six months of 2009 down 30.1% from the same period in 2008, so if you care to think about it, 30% in six months and 39.6% last month.....means......that....yep...it's getting worse, not better.

But Peru isn't in recession....oh no, whatever makes you think that?

UPDATE: A very sad but very true observation comes from regular reader Ward in the comments section below. Here's the excerpt:

"...the fact that you typically need to be (very) young, female and goodlooking to be hired by a Peruvian bank may not bode well for having the most qualified people for the job."

Aaaaahhh... BOHICA*

Are we having fun today, mineheads?

HUI down 5% this morning...oh yummy

Now here comes the strange thing; all I see all around the biznews outlets are the same headlined stories from Bloomie, AP and suchlike screaming about the World Bank dropping world GDP estimates from -1.7% to -2.9% in 2009.

"Stocks Fall on World Bank Forecast; Dollar, Yen Rise", says Bloomie

"US stock market declines as World Bank reduces 2009 forecast for global economy", says AP

But the World Bank announced this revision plenty time ago, as Yves Smith at Naked Capitalism correctly points out (before the G8 meeting, in fact). So what makes it move markets today, oh journalistic world? Smells veeery fishy to me.

*Bend Over Here It Comes Again

Peru GDP drops 2.01%...Holy Trickledown, Batman!

Hard landing, anyone? Peru closing that gap....

• FinMin and Liar Carranza expected "flat growth"
• Lima suits expected -0.5%
• Otto expected something around -0.7% by comparing Peru with Chile

But the result is much, much worse. Peru's April GDP figure has just been announced, and it's -2.01% YoY. That's bad enough, but the shocker is manufacturing growth at -13.64%. Fishery at -24.19% is bad, too. Then there are others, like the supposed motor of construction that dropped 1.48% and commerce down 2.29%. And it could have been worse if Peru were honest about mining, too. Despite 10,000 layoffs this year and far lower prices for products, Peru insists its mining industry has grown 2.77% YoY.

So much for February being a simple "pothole in the road" as Liar Carranza insisted at the time. So much for Twobreakfasts and his "armour plated economy". Right now the gov't is trying to make a lot of the fact that April 2009 had two less working days than April 2008....funnily enough the same moaners and wailing weren't worried about the two days added on to March'09 figures, though.

The only difference between the economies Peru and Chile is that the Chilean gov't is honest with its people and has made more provisions for the tough times ahead. Apart from that, they're both well in recession.

Chile: It helps to have smart friends

Armen Kouyoumdjian is the dude in question and when it comes to analysis of Chile's macro situation (or any other South American country when he put his mind to it, for that matter) there's no better independent voice out there. Armen's been kind enough to allow me to reproduce his weekly missive on the blog here today. If you want to join his list send him a mail (address below) and tell him Otto sent you...and say please, cos I consider being on his list a privilege, not a right.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

CRISIS IMPACT ON CHILEAN FISCAL RESULTS

An Analysis of the First Quarter 2009 results

By Armen Kouyoumdjian

kouyvina (AT) cmet.net

June 12, 2009

The news that Chile’s GDP was negative for two quarters and fell even sharper during April means that the country is in recession according to the generally accepted principles of economic analysis. However, the authorities have refused to use the term, adding another element to my description of “management by negation”.

There is one aspect where figures do not lie, because contrary to many other vague macro-economic statistics (such as GDP, Unemployment or Inflation), it reflects a more or less precise accounting exercise. This refers to the fiscal accounts, for which first quarter 2009 figures were published in late April, and I have only now gotten round to processing them.

PARTICULAR FACTORS Even though budgetary figures may be precise, their presentation has become exceedingly hard to fathom in recent years. The reasons include combining current, fixed and financial transactions in the final results, and allow Hacienda advisors to come up with somewhat distorted final figures. Still, the raw material is there and it can tell us a lot. Another statistic which tells us a lot about the crisis in Chile, but is not financial, are the 20,000 homeless people who seek shelter each night in Santiago alone, and that figure only relates to those staying in the hostels of one such charity, the Hogar de Cristo.

The first quarter of 2009 figures should not be projected for the full year, because they incorporate some aspects which are unlikely to persist for the whole of the year. They include the impact of the exchange rate on both revenue and expenditure denominated n foreign currency. In the first quarter of 2008, the exchange rate averaged 454 pesos per U$. The equivalent figure for 2009 was 581 pesos. Discounting inflation, the real peso value of the dollar increased by 22 % on a year-on-year basis.

The other variable which marked a strong change was the price of copper. From an average of U$ 3.54/lb. in January-March 2008, the price dropped 56 % to just U$ 1.56 this year. It has averaged U$ 2.03 in April/May and is now over U$ 2.30.

One aspect which does look as if it will continue all year is the increase in expenditure, because it is an electoral year. One has to take this with a pinch of salt as announcements and actions are separated by the Chilean bureaucratic Colorado Canyon (the U$ 1 bn capitalisation of CODELCO, part and parcel of the U$ 3bn “stimulation plan” announced ages ago, is still under discussion).

There is not much point comparing the first quarter results to the draft budget for 2009 announced at the end of October last year. This is not so much because we only have one quarter’s figures, but the hypotheses contained therein on growth, inflation, copper price and the exchange rate have long since lost their meaning.

REVENUE SIDE Looking at current revenue, which consists mainly of taxes, these plunged by 37.3 % in the first quarter, to a total of U$ 7.64 bn. Though some of the drop was due to temporary reductions or suspension of taxes on fuels and stamp duty for instance, other items truly reflect a very sick economy in terms of growth.

No tax reflects economic activity better than VAT. Revenue from that source accounted for no less than 38 % of current income, and fell by 20.5 % in real terms (all percentages mentioned in this report, in accordance with Chilean accounting principles, are in real terms).

Revenue from copper and other mining activities saw the sharpest drop, falling by 92 %, and ending up at just 3.4 % of revenue. In fact, they reverted to form, and maybe now people will believe me when I say that in most years, the Chilean state gets more out of the nasty habit of smoking than from copper. No wonder, in the country with the highest per capita expenditure on cigarette and drink, as previously mentioned. In fact, tobacco taxes brought in $ 248 million during the quarter, 70 % more than copper, and bucked the trend with a 6.5 % increase. A combination of less driving and lower taxes meant that on the other hand, fuel duties brought-in 13.9 % less, at U$ 314 million. Lower imports and statutory reductions under Free Trade Agreements meant that customs revenues dropped by 48.6 %. Income tax, another good measure of economic activity, and which accounted for 29.5 % of revenue, saw its yield reduced by 25.2 %.

There is a puzzling increase of 8.4 % in the revenue from state social security contributions, which at first glance does not square up with the increase in unemployment. The only explanation I can think of is the move of lower paid workers from private health coverage to the less expensive state FONASA scheme.

Non-current revenue only brought in an additional U$ 57 million.

Some time in the near future, if it has not already been said, some (or several) authorities will insist that the deterioration of public finances is mainly due to the fall in copper. This argument, which is older than the Tibetan Book of the Dead, once again stands no scrutiny. In the first quarter of 2009, the Treasury received U$ 2.2 bn less from copper. This represents less than half the total loss in revenue (U$ 4.54 bn).

Like all of us stupid savers, public finances also bore the brunt of the drop in interest rates on the country’s savings. These dropped by 77 % to U$ 257 million. As of March 31^st, consolidated Treasury savings amounted to U$ 23.4 bn.

EXPENDITURE SIDE The analysis of the expenditure side of the equation is more complicated, because we have an important element of non-current items. Starting with current expenses, these increased by 15.3 % in the first quarter, with all items showing an increase, led by purchases of goods and services (+ 20.5 %) and subsidies & donations (+ 17.7 %). The 14.9 % increase in the interest bill (itself a modest U$ 255 million, almost exactly equal to the revenue on savings), is most probably due to the higher peso cost of servicing dollar debt, as mentioned earlier.

To the U$ 7.18 bn of current expenditure, one has to add U$ 1.55 bn of non-financial investments and transfers. The amount of investment, at U$ 922 million, jumps by 57.3 %, though transfers to other entities also shows a 57.5 % increase. It remains to be seen how much of that money has actually been spent at the receiving end. The official report mentions a 73 % increase for housing, 52 % for public works and 45 % for public security.

Combining current and investment outlays, total expenditure increased by 21.3 % in the first quarter.

BALANCE AND OUTLOOK On the basis described above, there was a quarterly deficit of U$ 1.1 bn or 0.7 % of GDP. Under the circumvoluted methodology of Hacienda, they still aim for a balanced budget for the full year.

Chile's economic activity drops like a stone

Oh lordy! Here's the short'n'sweet Bloomie note that just about sums it up:

June 5 (Bloomberg) -- Chilean economic activity shrank 4.6 percent in April from a year earlier, the central bank said today on its Web site.

The median estimate of 19 economists in a Bloomberg survey was that economic activity contracted by 3.5 percent in April, the sixth consecutive decline.

Seasonally adjusted activity declined 0.7 percent from March, the bank said.

The Chilean number reported today is the IMACEC figure, a reliable proxy to GDP. It also means that Chile's economy is now in recession to the tune of -1.3% (the annual figure).

When we look at how Chile's monthly IMACEC number compares to Peru's monthly reported GDP.....


......we see that the two are very closely related, unsurprising for two economies have have much in common. Which means that if Peru is honest with the world when it reports its number (usually on or around the 15th of the month) it will turn in a negative result of -0.7% (give or take) for April 2009. The only question left is whether the INEI has the balls to tell the truth....recent evidence casts doubt.

In Peru, simply announcing a plan adds to GDP....

.....and nobody cares whether it ever becomes reality.

The big Twobreakfasts plan to save Peru from recession is the "PEE" (Plan de Estímulo Económico or Economic Stimulus Plan). The whole idea is basically pumping a shitload of money into the economy via public works (roads, build schools, hospitals...a whole list of stuff like that) using funds tucked away for the rainy day. The liars at FinMin came up with a plan to spend U$2.5Bn in 2009 which would, according to their skewed slide rules, add 3% GDP growth to Peru this year and save the country from the abyss.

Well here we are six months down the line and how is the plan coming along?

Oh dear.

Of the $2.5Bn aimed at Peru from the government coffers, only U$390m has been or is being spent right now. According to this report in South America's 'serious' bizpress, AmericaEconomia, 16% of planned national works are or have happened, regional governments have executed 12% of their plans and local governments have m,anaged to get 15% of their plans going. Anyone who knows anything at all about LatAm bureaucracy will not be at all surprised, as most of the time they're trying to work out how much of the slush can end up in their own back pockets. In fact, it's interesting to speculate on just how much of that supposed $390m number has been diverted, never to be seen again (and certainly never to be turned into cement, rebar or tarmacadam).

There's more chance of Diego Maradona bedding Keira Knightley than there is of this plan adding 3% to Peru's GDP this year, but I doubt anyone in the higher echelons of Twobreakfastslandia cares a damn because there's always INEI available to fix the figures for them. Style above substance? Of course! It's South America, dude.

Financial crisis quiztime: What's the difference between Colombia and Peru?

Answer: Both countries are in recession but only one of them has a decent, well-run and reliable statistics office.

Colombia's official statisticians hang out at a place called DANE and it's one of the three stats offices on this continent that are always good to take at face value (the other two are Chile and Brazil, by the way). Other stats offices are either too small to worry about (e.g. Bolivia), push the window sometimes without really lying (e.g. Venezuela) or are just plain liars (e.g. Argentina, Peru). Here's Reuters in Spanish this morning on Colombia's ministerial admission that recession has arrived. I couldn't find any English language links yet so the first paragraph is translated.

UPDATE1 Colombia Economy may have entered into Recession

Bogota, June 3 (Reuters) The Colombian economy may well have entered into recession with a drop in GDP of 0.7% in the first quarter, a similar figure to that registered in the last quarter of 2008, Minister of Finance Oscar Iván Zuluaga admitted Wednesday.

continues here (Spanish language)

If it weren't for the integrity of DANE, Zuluaga would not be out there admitting recession, be in no doubt. If he could get away with the deception and lies of Twobreakfasts he'd do it like a shot, especially when you consider what he said just six months ago:

Nov 23rd 2008: Neither recession nor financial crisis in Colombia, said the Ministry of Finance, Oscar Iván Zuluaga in an economical forum in Cartagena de Indias last week. The Minister, cited by Portafolio, the Colombian magazine on economics, said that the national economic is preserved from the global financial crisis due to a better domestic fiscal scenario, and that Colombia is the second Latin American nation with biggest private investment related to the Gross Domestic Product (GDP).