Peru: Economic activity declines in February
Economic activity dropped 4.2% in February, following January’s 1.0% fall, and marking the first sequential decline in activity since April 2020. February’s fall reflected the continued influence of the total lockdown of Lima and nine other regions that was instigated towards the end of January, as authorities responded to a rapid escalation of daily infections since the start of 2021. As such, contractions in the hospitality, transport and retail sectors drove the overall reading.
On a monthly basis, economic activity dropped 2.1% in February (January: -0.2% mom). Meanwhile, the trend pointed downwards, with the annual average variation of economic activity coming in at minus 12.1%, down from January’s minus 11.4% reading.
Looking ahead, March is likely to see a large rebound in activity, not least due to the easing of restrictions during the month. Furthermore, a favorable base effect should see impressive growth rates in the coming months, since March 2020 coincided with the strict lockdown placed on the country at the outset of the pandemic that saw economic activity plummet.
To this end, José Luis Nolazco, economist at Credicorp Capital, commented:
“In Mar-21, economic activity would rebound by 20% [yoy] due to 13 additional working days because of the strict quarantine of last year. Thus, GDP would have increased 4% y/y in 1Q21 (first positive print in 4 quarters). By Apr-21, we expect economic activity to accelerate to 45% y/y (Apr-20: -39%). So far in Apr-21, our weekly consumption rate is increasing by 24% y/y. Also, electricity consumption is up 40% y/y and in the last week grew +46% y/y.”