Peru | Measures to contain the spread of COVID-19 significantly affected output in 1Q20

Summary

GDP strongly contracted in the first quarter, reflecting the measures implemented since mid-March by the Government in order to contain the spread of the new coronavirus.

Key points

• Key points:
• On the expenditure side, both private spending (especially investment) and exports declined markedly, by 5% the former and by almost 14% the latter.
• Despite the sharp contraction in both export volumes and trade surplus, the deficit in the current account of the balance of payments moderated in the first quarter because foreign firms profits decreased.
• The fiscal accounts reflected the Government’s relief measures for firms and households. As a result, the accumulated fiscal deficit over the last four quarters reached a level equivalent to 2,6% of GDP, while gross public debt stood at 26,2% of GDP.
• Available indicators for economic activity in the second quarter suggest that output will contract again in that period, significantly, and more sharply than we anticipated a couple of months ago. In this context, we have modified our 2020 GDP forecast to a contraction range of between 12% and 20%.

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