Peru GDP

Peru

Peru: Economy decelerates in Q1 on weaker exports and investment

May 30, 2014

GDP expanded 4.8% over the same quarter of last year in Q1, which was down from the 6.9% increase observed in Q4. The reading marked the weakest expansion since Q1 2013, but was in line with market expectations. On a quarterly basis, GDP growth dropped from a seasonally-adjusted 1.7% in Q4 to just 0.1% in Q1.

Domestic demand was the main driver behind the expansion. Government spending expanded 9.5% annually in Q1, which more than doubled the 4.5% increase tallied in Q1. Private consumption expanded a healthy 5.1%, although this was down from the 6.0% expansion tallied in Q4. Total investment decelerated from a 6.5% expansion in Q4 to just 1.7% growth in Q1, which represented the weakest expansion since Q4 2009. Fixed investment, however, picked up slightly in Q1, having expanded 2.5% (Q4: +2.4% year-on-year).

On the external front, exports of goods and services rose a meager 0.3% over the same quarter last year in Q1 (Q4: +3.2% yoy). Weakening external demand for important export commodities such as copper is dragging on output. Meanwhile, imports fell 0.1% in Q1, which was up from the 0.3% contraction registered in Q4. Consequently, the external sector’s net contribution to overall economic growth decreased from 0.9 percentage points in Q4 to 0.1 percentage points in Q1.

The Central Bank sees the economy expanding 5.5% in 2014 and expanding to 6.7% in 2015. LatinFocus Consensus Forecast panelists expect GDP to expand 5.4% in 2014, which is unchanged from last month’s projection. For 2015, the panel expects the economy to increase 5.6%.


Author:, Economist

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Peru GDP Q1 2014

Note: Year-on-year changes of GDP in %.
Source: Peru National Statistical Institute (INEI) and LatinFocus Consensus Forecast


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