Peru | Economic activity closed 2022 with a marked loss of dynamism

GDP grew 0.9% YoY in December (lowest monthly reading for 2022). Non-primary GDP stagnated in a context of social upheaval and conditions for private spending that are not the most favorable. On the other hand, the primary component of GDP registered an expansion of 5.4% due to the good performance of mining.

Key points

• Key points:
• What stood out most in the January print was the behavior of non-primary GDP, which in recent reports had been showing year-on-year growth rates close to 2%, but stagnated in December in a context of social upheaval and unfavorable conditions for private spending. On the other hand, the primary component of the GDP registered an expansion of 5.4% thanks to the good performance of the mining activity.
• Incorporating the December result, the Peruvian economy grew 1.7% year-on-year in the fourth quarter and 2.7% in 2022, in line with our forecast. The moderation of annual growth in 2022 (13.6% in 2021) reflects above all the exhaustion of the post-COVID rebound, but also other factors such as the sustained social conflicts in extractive sectors, the erosion of families’ purchasing power that high inflation generates, and the increasing costs of financing. Added to this in December was the social upheaval in the country.
• The continuity of this social upheaval in January 2023 and the balance of indicators available for that month suggest that GDP growth was also modest in January.
• Our growth forecast for 2023, made at the beginning of last December, is 2.5%. However, the subsequent increase in social conflict that has dragged on until now, as well as the uncertainty generated by the eventual start of an electoral process, give this projection a downward bias, despite the more positive external environment.

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