Juan Carlos Barboza & Diego Ciongo
15/02/2023
The monthly GDP proxy expanded 0.9% yoy in December (down from 1.7% in November), below our forecast of 2.0% and market expectations of 1.2% (as per Bloomberg). The quarterly annual rate of monthly GDP stood at 1.5% in 4Q22 (from 1.7% in 3Q22), dragged by non-primary activity (1.3%, from 2.4%), while primary activity grew 3.0% (from -1.3%). We note restaurants & hotels (5.8% in December, from 8.2% in November), commerce (1.8%, from 3.0%) and agriculture (-1.0%, from 1.3%) sectors slowed down in December. Preliminarily, 2022 GDP growth would stand at 2.7%, after upward revisions in historical data.
Activity momentum was soft in 4Q22. Using seasonally adjusted series, published by Peru’s statistics institute, the monthly GDP fell by 0.2% mom in December, taking quarter over quarter (non-annualized) growth rate to 0.1%, and indicating so far limited impact on activity from protests (a deeper impact will likely be registered in the upcoming activity readings).
We expect 1.8% GDP growth for this year. While a more benign external scenario (stronger growth in China and higher copper prices) adds upside risk to our estimate, the direct impact on activity from persistent protests and the uncertainty surrounding the political scenario are strong headwinds to the economy. A tighter monetary policy stance and supply-side inflation acceleration will likely also curb growth.
Julio Ruiz