Peru | Marked weakness in GDP continues at the beginning of the third quarter

GDP contracted 1.3% y/y in July. By productive sectors, the non-primary component contracted 1.8%, highlighting the decline in the construction sector and non-primary manufacturing. For its part, the primary component of GDP registered a growth of 2.2% due to increased mining production.

Key points

• Key points:
• By productive sectors, the non-primary component of GDP contracted 1.8%, highlighting the decline in the construction sector and non-primary manufacturing, mainly linked to the production of consumer and intermediate goods.
• On the other hand, the primary component of GDP registered a growth of 2.2%, highlighting on the positive side the greater mining production and on the negative side the decline in the Fishing sector (and Primary Manufacturing) due to the suspension of the first season of anchovy capture in the north-central area.
• The available indicators point, on balance, to activity in August remaining weak. Although electricity production grew more in August than in July, the high-frequency indicators of private consumption and investment prepared by BBVA Research continued to decline, in addition to the fact that public investment contracted in August.
• For the remainder of the year we anticipate some improvement in GDP performance. The decrease in inflation and greater public spending aimed at tasks that seek to mitigate the impact of El Niño in 2024 will provide some support to domestic demand. However, the outlook for climatological anomalies remains complicated. In addition, Quellaveco's statistical boost, while productive sectors whose performance is linked to private spending continue to register pronounced weakness.
• In this context, and although we continue to foresee that the GDP figures in the last months of the year could be somewhat more favorable, our projection for the advance of GDP in 2023 as a whole (currently at 1.6%) has a clear and significant downward bias, which we will validate at the beginning of October when, like every three months, we review our base scenario of macroeconomic projections.

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