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Peru Economic Activity April 2021

Peru: Economic activity growth hits record high in April

Economic activity grew 58.5% in year-on-year terms in April, which was above March’s 18.2% increase and marked the best result on record. April’s surge was in part due to a low base effect, with April 2020 coinciding with a vertiginous fall in activity due to the outbreak of the pandemic and associated stringent lockdown measures. Nonetheless, rapid accelerations in hospitality services, transport, construction and mining drove the overall reading this month.

On a monthly basis, economic activity decreased 1.1% in April, which, while softer than March’s 1.6% fall, was the fourth consecutive monthly fall in output. Meanwhile, the trend improved, with the annual average variation of economic activity coming in at an over one-year high of minus 1.1% in April, up from March’s minus 9.2% reading.

Looking ahead, May is likely to see another sizeable rise in activity, not least due to a favorable base effect since May 2020 marked the second largest contraction in activity after April 2020 due to the effects of the pandemic. However, the undecided nature of April’s general elections will have increased economic uncertainty during May, potentially weighing on activity somewhat.

Regarding the outlook for Q2, analysts at Credicorp Capital commented:

“Most leading and coincident economic indicators show that GDP would have grown near 40% y/y in Q2 2021, although this would imply, in seasonally-adjusted terms, a contraction with respect to Q1 2021. Looking forward, the external scenario brings tailwinds for the economy amid a stronger rebound of trading partners, a price of copper near record levels and terms of trade near 11-year highs.”

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