Peru: Decline in economic activity softens in July
Economic activity dropped 11.7% year-on-year in July (June: -18.1% yoy). July’s figure marked the smallest contraction since February, reflecting the staged remobilization of the economy in June and into July. The smaller contraction came on the back of more moderate falls in commerce, mining and construction sectors. However, the manufacturing and agriculture sectors declined at a sharper pace than in June, weighing on the overall reading.
On a monthly basis, economic activity rose 8.3% in July, which was below June’s record 20.2% expansion. Meanwhile, the trend pointed down, with the annual average variation of economic activity coming in at minus 8.4%, down from June’s minus 7.1% reading.
Looking ahead, José Luis Nolazco, an economist at Credicorp Capital, sees a softening but still-bleak panorama, given continued localized lockdowns and a national quarantine remaining in place on Sundays:
“Our estimates suggest economic activity declined around 10% y/y in Aug-20. On one hand, electricity demand fell 2.9% y/y (Jul-20: -6.0%), domestic cement consumption decreased only 0.1% y/y (Jul-20: -4.5%), non-traditional exports fell 6.2% y/y (Jul-20: -10.4%), and public investment contracted 25% y/y (Jul-20: -43%). In addition, most of the current situation and economic expectations indicators from the Central Bank’s survey of August improved compared to July; most of these indicators still remain at pessimistic levels (below 50) and below pre-pandemic levels.”