Peru: Economy expands at slowest pace in over three years
May 24, 2013
Economic growth lost steam in the first quarter, with GDP increasing 4.8% over the same period last year, which came in below the 5.9% expansion registered in the last quarter of 2012. The reading marked the slowest growth rate since the fourth quarter of 2009 but was widely anticipated by the market. However, a sequential assessment does not confirm the slowdown suggested by the annual data, as GDP increased a seasonally adjusted 1.5% in Q1, which came in above the 1.1% expansion recorded in Q4.
The quarterly slowdown reflects that total consumption decelerated from a 8.2% increase in Q4 to a 6.1% expansion in Q1, as both private consumption and government spending eased compared to the previous quarter. In addition, gross fixed investment slowed from a 11.2% increase in the fourth quarter to an 8.5% expansion in the first. That said, a strong upward shift in inventories caused total investment to accelerate over Q4.
In addition, the external sector deteriorated compared to the previous period, as exports of goods and services swung from a 1.2% increase in Q4 to an 11.2% contraction in Q1, which reflects a tumble in shipments of commodities, particularly of minerals such as gold and copper, amid weaker global demand. Meanwhile, imports grew 7.5% in the first quarter, weaker than the 9.9% expansion observed in the previous three-month period. As a result, the external sector's net contribution deteriorated from minus 2.0 percentage points in Q4 to minus 3.9 percentage points in Q1.
The Ministry of Finance expects GDP to expand between 6.0% and 6.5% this year. In its March inflation report, the Central Bank projects the economy to also grow between 6.0% and 6.5% in the full year 2013. For 2014, the Bank sees the economy expanding within the same range.
LatinFocus Consensus Forecast panellists expect GDP to expand 6.0% this year, which is down 0.1 percentage points from last month's projection. For 2014, the panel expects the economy to increase 6.2%.
Author: Ricardo Aceves, Senior Economist