Itaú BBA - PERU – GDP proxy posted a solid recovery in 3Q20

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PERU – GDP proxy posted a solid recovery in 3Q20

November 16, 2020

Non-natural and natural resource sectors recovered further in September

Monthly GDP was above market expectations in September. The monthly GDP proxy fell by 7.0% year-over-year in September (from -9.8% in August) above our forecast of -7.6% and market expectations of -7.8% (as per Bloomberg), taking the annual quarterly rate to -9.5% in 3Q20 (from -30.2% in 2Q20). The non-natural resource sectors recovered further (-7.9% in September, from -9.7% in August) driven by construction (4.4%, from -6.5%), associated to an improvement in public capital expenditure execution as social distancing measures were eased, while commerce and services stood at -6.1% (from -8.1%) and -10.3% (from -9.9%), respectively. In turn, natural resource sectors improved to -8.2% year-over-year in September (from -10.2% in August), supported by the volatile fishing output (7.3%, from  -6.5%), while mining output deteriorated slightly (-12.2%, from -11.2%).

At the margin, GDP proxy posted a solid expansion in 3Q20. Using our own seasonally adjusted series, activity continued recovering as it posted its fifth consecutive positive monthly expansion in September (1.1%), taking the quarter-over-quarter non-annualized rate to 28.5% in 3Q20 (from -26.4% in 2Q20). GDP proxy in September is still 10.8% below pre-outbreak levels (February).

We expect GDP to fall by 12.6% in 2020. Still, the large fiscal and monetary stimulus will support the recovery during the rest of the year and 2021 (we expect a GDP expansion of 9.6%). However,  political turmoil (including its effect on fiscal-policy execution) is a downside risk to economic recovery.

Julio Ruiz

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