Itaú BBA - PERU – Solid sequential GDP growth in November

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PERU – Solid sequential GDP growth in November

January 15, 2021

Non-natural resources sector supported November’s activity expansion

The monthly GDP recovered further in November, supported by non-natural resources sector.  The monthly GDP proxy contracted 2.8% year over year in November (from -3.8% in October), compared to our forecast of -3.5%, taking the annual quarterly rate to -4.5% in November (from -9.4% in 3Q20). The non-natural resource sectors recovered further (-3.9% in November, from -4.4% in October) driven mainly by construction output (17.3%, from 8.8%) which was supported by an improvement in public capital investment execution amid easing of distancing measures, while other services and commerce sectors stood at -2.5% (from -3.8%) and -7.8% (from -6.3%), respectively. In contrast, natural resources deteriorated to -3.6% year over year (from -1.6% in October), dragged by mining output (-4.8%, from -2.8%) and volatile fishing output (-0.7%, from 12.4%). 

​​​​​​At the margin, monthly GDP posted a solid growth in November. Using our own seasonally adjusted series, monthly GDP growth stood at 1.0% month over month, although at a slower pace than previous months (3.0% in October and 2.8% in September). As a result, the quarter-over-quarter non-annualized rate stood at 8.2%. We note GDP proxy in October is still 6.1% below pre-outbreak levels (February).

We expect GDP at -11.7% for 2020, recovering to 11.2% in 2021. A still expansionary monetary policy stance and higher terms of trade will support the recovery in 2021, though political uncertainty and a significant fiscal drag are factors constraining activity. Potential new harsh social distancing measures can also drag the economy in the short-term. 

Julio Ruiz

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