(Adds government forecast for January growth to third graph)
By Teresa Cespedes
LIMA, Feb 15 (Reuters) - Peru’s economy expanded by a stronger-than-expected pace of 3.25 percent in December from a year earlier and by 3.90 percent in all of 2016 as a surge in copper production offset tepid domestic demand, official data showed on Wednesday.
A Reuters poll had forecast a 2.8 percent economic expansion for December and 3.8 percent growth in 2016.
The sol currency surged against the dollar after state statistics agency Inei released the data, prompting the central bank to buy $95 million in the local spot market.
The finance ministry forecast an even faster monthly expansion of 4.5 to 5 percent in January thanks to two additional working days from the same month in 2016 and a rebound in public investments and fishing.
Peru had not posted such a robust annual expansion since 2013, when the mining-dependent economy was shifting to slower growth at the end of a decadelong commodities surge.
New and expanded copper mines commissioned during boom times have nonetheless spurred the economy’s gradual recovery since 2014, while sectors linked to domestic demand have stagnated or contracted.
In 2016, manufacturing slipped 1.63 percent, and construction fell 3.15 percent. Agriculture, retail sales, and services grew by 2 percent or less, Inei said.
The unemployment rate for the three months ending on Jan. 31 rose to 7.2 percent from 6.6 percent a year earlier, a sign that the recovery is not producing broad economic gains.
The mining and hydrocarbon sector contributed 1.94 points to last year’s 3.9 percent expansion, more than triple any other industry, Inei said.
A growing graft scandal that has stalled public work projects in Peru has threatened to stifle an ongoing recovery this year.
President Pedro Pablo Kuczynski’s administration said the economy might grow just 3.8 percent this year instead of 4.8 percent as previously forecast due to the far-reaching bribery probe of Brazilian builder Odebrecht.
Peru surpassed China as the world’s second-biggest copper producer last year, when it posted a 38 percent jump in production to a record 2.35 million tonnes on the back of fresh output from MMG Ltd’s Las Bambas mine and an expansion of Freeport McMoRan Inc’s Cerro Verde deposit. (Reporting by Teresa Cespedes; Writing by Mitra Taj; Editing by W Simon, Lisa Von Ahn and Bernard Orr)