Peru finmin says bottom has been reached

By Marco Aquino and Terry Wade

LIMA (Reuters) - The worst of the fallout from the global financial crisis has passed in Peru and its pace of growth should start to recover in the second quarter, Finance Minister Luis Carranza said on Tuesday.

Carranza, who spoke at the Reuters Latin American Investment Summit in Lima, said Peru should soon feel the benefit of more stable global financial markets and its own counter-cyclical economic policies.

"We likely hit the bottom in the first quarter, and we should see a stronger recovery in the second quarter," he told Reuters.

The government's economic stimulus program is "going well" and he has no plans at the moment to increase its size from $3.2 billion, or roughly 3 percent of gross domestic product, Carranza said.

Capital spending for infrastructure included in the program rose 43 percent in March from the same month last year. Public investment is on track to grow 50 percent in 2009 and should create 215,000 new jobs, mainly in infrastructure, he said.

"There's a much more expansive fiscal policy, which is totally financed. It will support domestic demand in the second quarter and going forward, and monetary policy has entered into an expansionary phase since inflation expectations have come down," Carranza said.

Both factors "will sustain growth in the second half of this year," he said.

The central bank has said that if inflation allows, it will "aggressively" cut interest rates, now at 5 percent.