Peru | Activity shrank again in February

GDP contracted 0.6% y/y in February. Primary GDP remained positive due to the performance of the Metal Mining and Fishing sectors. On the other hand, non-primary GDP fell again, affected by the negative results of the Non-primary Manufacturing and Construction sectors.

Key points

• Key points:
• Non-primary GDP fell again (February: -1.4%; January: -1.8%), affected by the negative results of the Non-Primary Manufacturing sectors (February: -8.4%; January: -3 .3%) and Construction (February: -10.2%; January: -11.7%). According to the Statistics Institute (INEI), the lower construction activity in February was due to the stoppage of works, especially in areas of high social tension, as well as lower orders in some cement companies, as a result of the road blockades.
• The seasonally adjusted series from INEI indicates that activity grew 0.5% in February compared to the previous month. In the first month of the year economic activity was greatly affected by the social protests that occurred in that period.
• The indicators available for March signal, on balance, a limited recovery (in year-on-year terms) in that month. On the one hand, the electricity output accelerated in March, but public investment would have slowed down. In addition, BBVA’s high-frequency indicators for private consumption spending and total investment continued to show weakness in March, a trend that has continued so far in April.
• With the March result, we estimate that the economy stagnated or contracted slightly in the first quarter of the year. For the remainder of 2023, the environment will continue to be challenging. On the external side, the scenario will feature high interest rates and a slowdown in global growth. On the local side, interest rates will also be high and an environment of uncertainty will remain due to political tensions. Added to this is the El Niño Phenomenon (FEN) that has been unfolding.

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