PERU – Sequential GDP growth improved in August

The further reopening of the economy supported the improvement in economic activity

Julio Ruiz


Annual GDP growth figures continued to slowdown in August as the favorable base effect (due to strict social distancing measures a year ago) fades away. The monthly GDP proxy expanded 11.8% year over year in August (from 12.9% in July), above our forecast of 10% and market expectations (as per Bloomberg). As a result, the quarterly annual rate stood at 15.8% in August (from 41.9% in 2Q21). On the natural resources side, mining output gained 3.2% year over year in the quarter ended in August (from 38.9% in 2Q21), while volatile fishing output fell by 37.5% (from 21.2%). Meanwhile, looking at the non-natural resources sector, construction output and services quarterly annual growth rate stood at 45.7% in August (from 230.9% in 2Q21) and 18.6% (from 26.9%), respectively.

At the margin, the monthly GDP expanded in August amid a further reopening of the economy. Using seasonally adjusted series, published by Peru’s statistics institute, the monthly GDP grew 1.5% month over month in August (from 0.2% in July and 0.6% in June), taking the quarter over quarter growth rate to 2.4%. We note hotels and restaurants activity index posted a large monthly growth rate of 22.8% in August (also using seasonally adjusted figures), consistent with the easing of social distancing measures.

We expect GDP growth of 11.0% for 2021, supported by the reopening of the economy, high terms of trade and a still expansionary monetary policy. However, lingering uncertainty over the direction of economic policy and a possible delay in public capital-expenditure execution due to the transition between administrations could curb growth.

Julio Ruiz