Peru: Business sentiment climbs further in May

The business confidence indicator came in at 54.2 points in May, above both April’s 53.6 points and the 50-point threshold that separates optimistic from pessimistic territory. Devastating floods in February and March had destroyed infrastructure and left 700,000 people homeless, dragging sentiment well below the 50-point threshold before the indicator rebounded in April.

Overall, the business sector seems to be gradually recovering from the natural disaster. Business confidence brightened thanks to an improvement in views on the current economic situation, while expectations for the coming months were broadly steady. Firms shored up their sales and production and reported higher demand. However, demand is expected to be slightly less buoyant in the next three months than previously estimated and the expected number of new hires was also revised downwards.

Panelists surveyed for this month’s LatinFocus report expect fixed investment to increase 1.1% in 2017, which is down 0.8 percentage points from last month’s forecast. For 2018, panel participants see investment growing 4.6%.