January 17, 2011 / 4:55 PM / 8 years ago

UPDATE 2-Peru economy surges nearly 10 pct in November

* Growth of about 9 percent seen for 2010

* Central bank raised interest rates this month (Adds jobless numbers)

LIMA, Jan 17 (Reuters) - Peru’s economy, one of the fastest-growing in the world, expanded 9.98 percent in November 2010 from the same period a year ago on surging domestic demand, official data showed on Monday.

The result was higher than the 9.1 percent forecast in a Reuters poll. The economy grew 8.8 percent in the first 11 months of last year from the same period a year earlier. Growth for the full year is forecast around 9 percent.

Peru’s economy is enjoying a boom driven by domestic construction, manufacturing and lending activity. The three sectors are outpacing the traditional economic engine of mining exports.

Worried that galloping demand and higher global food prices could cause inflation expectations to worsen, Peru’s central bank raised its benchmark interest rate this month by surprise to 3.25 percent from 3 percent.

Still, inflation is relatively mild and this year is expected to fall within the central bank’s target range of between 1 percent and 3 percent.

Economists say a neutral interest rate in Peru would be around 4 or 4.5 percent, suggesting the current policy tends to be expansionary rather than restrictive.

Compared with a year earlier, manufacturing rose 14.4 percent in November while construction rose 23.8 percent, retail climbed 10.8 percent, and financial services rose 11.2 percent.

The mining and oil sector shrank 3.9 percent.

The average jobless rate in metropolitan Lima fell to 7.2 percent for the three months through December, down from 7.9 percent a year ago as the number of people in the labor market increased by 1.8 percent in the same period. New jobs have been created in the construction and manufacturing sectors, according to the national statistics agency. (Reporting by Patricia Velez; Editing by Richard Chang)

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