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Peru Economic Activity October 2021

Peru: Economic activity growth slows in October, underlying momentum still solid

Economic activity grew 4.6% year-on-year in October, which was a moderation from September’s 9.7% increase. While October’s figure marked the lowest reading since February, it nevertheless constituted the eighth consecutive month of growth in activity. Moreover, the economy grew around 1.2% compared with October 2019, hinting at slowly-improving underlying dynamics. Looking at the breakdown by sector, retail sector growth slowed once again in October, while agricultural, manufacturing and mining output also decelerated.

On a monthly and seasonally-adjusted basis, economic activity rose 0.4% in October, which was below September’s 0.8% expansion and marked the weakest result since February. Meanwhile, the trend improved, with the annual average growth of economic activity coming in at 12.6% in October, up from September’s 11.8% reading.

Looking ahead, November should have seen a continuation in activity growth, although the favorable base effect will have once again reduced. However, continuing political uncertainty, spiraling inflation and tightening monetary policy all likely weighed on activity during the month.

Commenting on the outlook for 2022, José Luis Nolazco, economist at Credicorp Capital, stated:

“For 2022, we [made] a slightly upward revision to our real GDP growth forecast from 2.0% to 2.5% given the greater resilience exhibited [in 2021] and a stronger inertia. Although we are revising our growth forecast marginally to the upside, the opportunity cost will not be minor, as Peru could have aspired to grow 5% [this] year and completely close the large output gap recorded in 2020.”

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