Peru | GDP moderated its growth in June and responded negatively to the market

Summary

GDP grew 0.21% year-on-year in June, below market expectations. By productive sectors, both the primary and non-primary components moderated compared to the previous month.

Key points

• Key points:
• The primary sectors contracted 3.0% as a whole (+13.6% May). The mining sector recorded a drop of 8.1%, affected by plant maintenance at a mining unit. The agricultural sector also contracted as a result of adverse weather conditions and low levels of water resources.
• For its part, non-primary GDP grew 1.9% (2.4% in May). Compared to the previous month, the construction sector deteriorated, due to a lower push in public investment. In addition, non-primary manufacturing also contracted. In contrast, the growth of the commerce sector and some branches of the services sector accelerated, which would be associated, in part, with the withdrawals of pension funds.
• With the June data, we estimate that activity accelerated in the second quarter by 3.6% (1Q:1.4%), due to the boost of the primary sectors, particularly the fishing sector. It is important to note that the execution of the second quarter was somewhat below what was expected in our base scenario.
• The indicators available for July suggest that activity would have shown a better performance.
• Going forward, we maintain our forecast of 2.9%, but we remain attentive to analyzing (i) whether the economy shows a tendency to moderate its rate of expansion, (ii) the positive effect of the greater availability of resources associated with the new withdrawal of private pension funds, and (iii) the impact of the improvement in business confidence, which is already at its highest levels in the last three years.

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