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Peru Economic Activity August 2021

Peru: Economic activity growth slows slightly in August

Economic activity rose 11.8% in year-on-year terms in August, which was a slight deterioration from July’s 12.9% increase. August’s figure marked the lowest reading since February, but nevertheless still constituted a sixth consecutive month of double-digit growth. Moreover, the economy grew around 1.6% compared with August 2019, hinting at slowly-improving underlying dynamics. Looking at the breakdown by sector, retail growth slowed in August, while the agricultural sector also lost momentum. In contrast, activity in the manufacturing sector rose at a stronger rate, while mining and hydrocarbons production rebounded.

On a month-on-month, seasonally adjusted basis, economic activity rose 0.9% in August, which was below July’s 1.0% expansion and marked the lowest result since February. Meanwhile, the trend improved sizably, with the annual average growth of economic activity coming in at plus 10.3% in August, up from July’s 8.3% reading.

Looking ahead, September is likely to see another reasonable rise in activity, although the favorable base effect will once again reduce. Meanwhile, the heightened uncertainty around President Castillo’s tumultuous first months in office, will have likely weighed on activity during the month.

Commenting on the August reading, Sergio Armella, economist at Goldman Sachs, stated:

“The August positive activity momentum reflects the improved Covid-19 backdrop, particularly in activities most affected by social distancing protocols such as hotels and restaurants. New Covid-19 cases and confirmed fatalities have continued to decline, which should provide favorable conditions to activity in the near-term.”

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