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Peru Economic Activity November 2020

Peru: Economic activity records softest contraction since February in November

Economic activity dropped 2.8% year-on-year in November (October: -3.8% yoy). November’s figure marked the best result since February. The reading reflected an improvement in the commerce and construction sub-sectors. However, activity in the manufacturing, and mining and hydrocarbons sectors fell at faster rates than in the previous month, weighing on the overall improvement somewhat.

On a monthly basis, economic activity increased 0.9% in November, which was notably softer than October’s 4.4% expansion. Meanwhile, the trend pointed down, with the annual average variation of economic activity coming in at minus 11.1%, down from October’s minus 10.6% reading.

Looking ahead, José Luis Nolazco, an economist at Credicorp Capital, sees a strong rebound in activity in 2021 tempered somewhat by heightened uncertainty:

“GDP is set to bounce between 9% and 12% in 2021. On the external side, terms of trade currently stand at a 92-month high (copper is almost at an 8-year high) and capital flows to emerging markets have returned. On the local side, the rebound of activity has been faster than initially anticipated, while broadly expansionary monetary and fiscal policies will remain. However, political, social and health uncertainty will continue to play an important role. GDP would bounce 15% in 2021 if there were no such fog.”

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