Peru | GDP contracted in May and probably in the second quarter

Summary

GDP contracted 1.4% y/y in May. Within the set of primary activities, the marked decline in the Fishing and Primary Manufacturing sectors stood out. On the other hand, the non-primary component of GDP also contracted in a context in which private spending indicators continue to show weakness.

Key points

• Key points:
• The more significant decline within the set of primary activities was registered in the Fishing and Primary Manufacturing sectors, which reflected the lower catch of anchovy. On the other hand, the non-primary component of GDP also contracted (1.9%) in a context in which private spending indicators continue to show weakness. Construction and Non-primary Manufacturing, in particular, registered significant setbacks in the month.
• In seasonally adjusted terms, the level reached by GDP in May is consistent, according to the INEI, with a contraction of 1.3% compared to the previous month.
• Available indicators, overall, point to a contraction in activity in the second quarter (in year-on-year terms).
• The outlook for the second half of the year is somewhat more positive than for the first half of the year.
• Our growth forecast for 2023 is 1.6%, but the negative surprise in the second quarter reinforces the downward bias that this projection has, coupled with the risk of a more intense El Niño Costero than current forecasts suggest, lasting longer than expected with greater intensity, or has more sensitive impacts.

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