Peru | Economic activity remains in a slump

Summary

GDP grew 1.7% year-on-year in August. The lackluster performance of GDP growth occurs in a context in which i) the positive effect of the normalization of activities that were most affected by the sanitary isolation measures is dissipating while ii) mining and hydrocarbon activities continue to weigh down on growth.

Key points

• Key points:
• Non-primary GDP (excluding import duties and taxes) grew 2.2% in August, a similar figure to the previous month. On one hand, the Construction sector accelerated. However, services such as Transport and Hospitality and Restaurants continue to lose dynamism as the “rebound” effect of the removal of sanitary isolation measures dissipates. Non-primary Manufacturing, meanwhile, continues in negative terrain.
• Primary GDP experienced a sharper contraction in August. Hydrocarbon production shrinked further due to climatological and technical problems, while mining production continues in negative terrain, reflecting a low grade in treated minerals and persistent social conflicts.
• Thus, after growing at a year-on-year rate of 3.5% in the first half of the year, activity has lost dynamism and is advancing at a rate of 1.5% thus far in 3Q22.
• For the rest of the year, our base scenario considers a more challenging scenario and, in consequence, it is likely that we will continue to see relatively weak growth rates in the remainder of 2022. For now, we continue to maintain our forecast that the year will close with a GDP expansion around 2.3%.

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