Peru: Economy maintains healthy pace in second quarter
August 24, 2012
In the second quarter, GDP grew 6.1% over the same quarter a year ago. The quarterly expansion, which was broadly in line with market expectations, followed an expansion of the same magnitude in the first quarter, reflecting how an improvement in domestic demand was offset by a deterioration in the external sector. Total consumption increased a healthy 6.3% annually in Q2, buttressed by a solid 10.6% expansion in public consumption, as the Humala administration has vowed to ramp up social spending. Private consumption increased 5.8% in Q2, which was virtually unchanged from the 6.0% expansion recorded in Q1. Finally, fixed investment remained resilient and grew 15.8% in the second quarter (Q1: +16.5% year-on-year). The external sector showed that exports of goods and services swung from a 17.9% increase in the first quarter to a 2.5% contraction in the second, reflecting declining commodity prices, particularly for minerals, Peru's main commodity export. Imports expanded 5.7% in Q2, almost half the 11.3% growth rate recorded in the previous quarter. As a result, the net contribution from the external sector to overall economic growth swung from a 0.6 percentage-point contribution in Q1 to a 1.6 percentage-point detraction in Q2. The government expects the economy to expand 6.0% this year. Meanwhile, the Central Bank expects the economy to grow 5.8% this year, before accelerating to 6.2% in 2013.
Author: Ricardo Aceves, Senior Economist