Peru | GDP rebound exceeds expectations in May

Economic activity grew 47.8% YoY in May, a very positive surprise (Bloomberg consensus: 42.4%). It is worth mentioning that, as has been the case in recent months, this figure hides a low YoY comparison base due to the fact that isolation measures were in force in May 2020.

Key points

• Key points:
• In an analysis that compares the GDP figures for 2021 with those for 2019 (a pre-health crisis situation) in order to avoid the strong distortion generated by the low YoY comparison base, what we observe is that in May of this year activity fell by 0.4%. The decline is more limited than in the two previous months.
• The situation is more positive on the non-primary GDP side, which expanded 0.5%. Construction continues to grow. In addition, commercial activity improved notably in a context of higher demand due to the Mother's Day campaign. Finally, financial services and telecommunications continued to expand strongly.
• On the primary side, there was a relatively sharp decline: Hydrocarbons' production contracted because some oil wells in the jungle and on the coast continue to be paralyzed, and because of a technical problem in May at a natural gas liquefaction plant. In the case of Metallic Mining, it is still not operating at 100% of its capacity.
• The general tone of the indicators available for June suggest a moderation in activity, particularly those related to investment.
• So far this year, local activity has been surprisingly positive. In addition, the international environment is more favorable for Peru. On the other hand, however, it is likely that the U.S. Federal Reserve will tighten monetary conditions sooner than expected, in addition to the local uncertainty about the policies that the next government administration will implement, something that induces the private sector to be more cautious in their spending, waiting for concrete announcements and especially for actions from the new government.

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