PERU – GDP proxy continued to expand on sequential basis in July

We recently revised our GDP growth forecast to 11.0% in 2021, compared to our previous scenario of 10.2%.

Julio Ruiz


The monthly GDP growth continued to grow in July at strong pace helped by favorable base effect (due to strict social distancing measures a year ago). The monthly GDP proxy expanded 12.9% year over year in July (from 23.4% in June), above our forecast of 11.5%, bringing quarterly annual rate growth down to 26.7% in July (from 41.9% in 2Q21). On the natural resources side, mining output growth stood at 18.7% year over year in the quarter ended in July (from 38.8% in 2Q21), as volatile fishing output dropped 5.1% (from 21.2% in 2Q21). Looking at the non-natural resources sector, construction output and services quarterly annual growth rate stood at 94.2% in July (from 230.9% in 2Q21) and 23.6% (from 26.9%), respectively.

At the margin, the monthly GDP posted its third consecutive expansion. Using seasonally adjusted series, published by Peru’s statistics institute, the monthly GDP grew 0.16% month over month in July (from 0.6% in June and 3.1% in May), taking the quarter over quarter growth rate to 1.8% in the quarter ended in July, up from -0.9% in 2Q21.

We recently revised our GDP growth forecast to 11.0% in 2021 (compared to our previous scenario of 10.2%) reflecting better than expected activity data and improved terms of trade (higher copper prices expected). A positive carry-over and a still expansionary monetary policy will support the recovery. On the other hand, uncertainty from the political environment and a possible delay in public capital expenditure execution due to the transition between administrations could curb growth. A resurgence of the outbreak, amid a still low percentage of the population vaccinated, leading to a retightening of social distancing measures is also a downside risk to our outlook.

Julio Ruiz