Activity in March was curbed by cyclone Yaku. The monthly GDP proxy increased 0.2% yoy in March (from -0.6% in February), below market expectations of 1.3% (as per Bloomberg), but above our forecast of -0.7%. The 1Q23 annual rate of monthly GDP stood at a soft -0.5% in 1Q23 (from 1.7% in 4Q22), dragged by non-primary activity (-1.5%, from 1.3%), while primary activity grew 4.4% (from 3.3%). Construction (-12.4% yoy), agricultural (-2.6%) and services (1.5%) sectors were soft in March, likely associated to excess rains due to the cyclone. On the other hand, volatile fishing output stood at 22.1% yoy in March, while mining output recovered (9.3%) after protests in previous months.
At the margin, activity momentum was weak in 1Q23. Using seasonally adjusted series, published by Peru’s statistics institute, the monthly GDP registered a practically null growth in March, taking quarter over quarter (non-annualized) growth rate to -0.8%.
We expect 1.8% GDP growth this year. Activity expansion this year will be curbed by a weak first quarter affected by social protests and weather shocks. The risk of a moderate (so far) el Niño event, which could extend through July, poses some downside to our forecast.