Peru: Economy decelerates in fourth quarter
February 22, 2013
In the fourth quarter, GDP expanded 5.9% over the same period the previous year. The reading came in below the revised 6.8% expansion observed in the third quarter (previously reported: +6.5% year-on-year) and marked the slowest growth rate seen in one year. In addition, the figure undershot market expectations, which had the economy growing 6.3%. On a quarter-on-quarter basis, GDP increased a seasonally adjusted 1.1% in Q4 2012, below the 1.6% expansion in Q3.
The quarterly slowdown reflected slower growth in domestic demand, with gross fixed investment decelerating from the 17.1% expansion recorded in Q3 to an 11.3% expansion. Private consumption grew 5.8% in the fourth quarter, which matched the growth rate seen in the third. On the other hand, government spending surged 22.3% in the final quarter of 2012, well above the 6.6% increase recorded in previous three-month period.
The external sector, on the other hand, improved somewhat compared to the previous period, as exports of goods and services accelerated slightly from a 1.1% increase in the third quarter to a 1.2% expansion in the fourth. Simultaneously, imports slowed from a 15.2% expansion in Q3 to a 9.9% rise in Q4. As a result, the external sector's net contribution to overall economic growth improved from minus 3.3 percentage points in Q3 to minus 2.0 percentage points in Q4.
In the full year 2012, the economy grew a healthy 6.3% (2011: 7.0%), making Peru one of the fastest growing economies in Latin America.
The Ministry of Finance expects GDP to expand between 6.0% and 7.0% in the first quarter of this year. Furthermore, in its December inflation report, the Central Bank predicts the economy to grow between 6.0% and 6.4% in the full year 2013. For 2014, the Bank sees the economy expanding between 6.0% and 6.5%.
LatinFocus Consensus Forecast panellists expect GDP to expand 6.0% this year, which is unchanged from last month's projection. For 2014, the panel expects the economy to increase 6.1%.
Author: Ricardo Aceves, Senior Economist