Peru | Growth accelerated at the beginning of the year but more complicated scenario ahead

Summary

GDP accelerated in January due to the normalization of mining output and the activities in the services sector. However, early indicators indicate that activity will slow down going forward, in an environment of weak business confidence, contraction in public investment and withdrawal of economic stimuli.

Key points

• Key points:
• Economic activity grew 2.9% year-on-year in January. The main support of activity was the non-primary component of GDP, within which the growth of Commerce and Hospitality and Restaurants stood out, partially offset by the decline in Construction and Financial Services. On the other hand, the primary component of GDP grew in January, after remaining in negative territory for two consecutive months. Within the extractive activities, those that showed greater dynamism were Hydrocarbons and Metal Mining.
• In seasonally adjusted terms, the economy also showed a favorable performance in January. According to the seasonally adjusted series reported by the INEI, output expanded 1.4% (0.4% in December).
• Higher frequency indicators available for February show mixed results. On the one hand, electricity production accelerated in year-on-year terms. On the other hand, domestic cement consumption and public investment showed contractions in the second month of this year.
• The investment indicator with high-frequency data prepared by BBVA Research shows that so far in March, private investment spending continues to slow down. This trend is in line with the weakness of business confidence, which in its last reading of January 2022 registered 45 points (in the pessimistic zone).

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