Peru | The year-on-year contraction of activity accentuated in the third quarter

GDP contracted 1.3% y/y in September. By productive sectors, the non-primary component of GDP contracted 2.8%, highlighting the decline in the construction and non-primary manufacturing sectors. On the other hand, the primary component of GDP registered a 3.9% expansion due to increased mining and fishing production.

Key points

• Key points:
• With the September result, we estimate that in the third quarter of the year GDP contracted around 1.0% in year-on-year terms, thus registering three consecutive negative quarters.
• Available indicators reveal, on balance, that activity remained weak at the beginning of the fourth quarter, although perhaps less markedly than in the previous one.
• There are some elements that will support economic activity during the remainder of the year. Inflation is declining rapidly, giving families some respite. In addition, the execution of public spending aimed at mitigating the impacts of El Niño in 2024 will surely accelerate, to which will be added the disbursement of bonuses for public sector workers. A second anchovy fishing season has opened in the central-northern area, which, although it seems to be progressing with some difficulties, could lead to more fishing than in the last months of 2022. Furthermore, the following months will benefit from positive base effect due to the political and social upheaval that began at the end of last year.
• Despite this, we estimate that the growth rate of GDP is unlikely to register a significant recovery in the fourth quarter. We also believe that the sustained weakness of business confidence, affected among other factors by successive negative surprises on economic activity and an El Niño phenomenon that could be complicated in the coming months, will inhibit any marked rebound in private spending in the very short term. In this context, we estimate that the year-on-year growth rate in the fourth quarter of the year will hardly exceed 1%.

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