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Peru Economic Activity December 2021

Peru: Economic activity records slowest growth since February in December

Economic activity expanded 1.7% compared to the same month a year earlier in December, which followed November’s 3.5% increase. While December’s result marked the lowest reading since February, it nevertheless constituted the tenth consecutive month of growth in activity. Looking at the breakdown by sector, December’s slowdown largely reflected weaker retail and manufacturing sector activity, while the construction sector contracted at a steeper rate than in the prior month.

On a monthly and seasonally-adjusted basis, economic activity rose 0.2% in December, which was below November’s 0.3% expansion and marked the worst result since February. Meanwhile, annual average economic activity growth rose to 13.3% in December, rising marginally from November’s 13.2% reading.

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

Commenting on the outlook for January, Sergio Armella, economist at Goldman Sachs, stated:

“Going forward, activity will likely be affected in the near-term due to the acceleration of new Covid-19 cases associated with the Omicron variant. Peru has been experiencing elevated Covid-19 spread, with the rate of contagion rapidly rising through January. On the positive side, new cases peaked in late January and Peru exhibits a comparatively strong immune profile given a large number of prior infections and advancing vaccination.”

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