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Peru: GDP decelerates again in Q4, full year 2014 economic growth weakest in five years

February 20, 2015

GDP in Q4 expanded 1.0% over the same quarter of the previous year, which was below the 1.8% increase observed in Q3. The reading was the weakest in more than five years and fell short of market expectations of a 1.2% rise. Sequential data show that GDP in Q4 grew 0.4% over the previous quarter, which matched the increase observed in Q3. Q4’s weak result reflects ongoing declines in investment and export growth, as well as a slowdown in government spending.

Domestic demand grew 1.7% in Q4, which was slightly below 1.9% increase tallied in Q3. Private consumption expanded 3.6%, which was roughly in line with the 3.7% expansion tallied in Q3. Government spending expanded 3.0% annually in Q4, which was well below the 9.3% increase tallied in Q3. Total investment contracted 2.2% in Q3, although this was not as severe as the 4.6% decline in Q3. Total investment was dragged down by fixed investment, which fell 3.3% (Q3: -3.6% year-on-year).

On the external front, exports of goods and services in Q4 dropped 1.8% over the same quarter last year (Q3: -4.7% yoy). Weakening external demand for important export commodities such as copper continues to weigh on output. Meanwhile, imports grew 0.9% in Q4, which contrasted the 4.1% contraction registered in Q3. Consequently, the external sector’s net contribution to overall economic growth deteriorated from minus 0.1 percentage points in Q3 to minus 0.7 percentage points in Q4.

In the full year 2014, GDP increased 2.4%, which was well below the 5.8% expansion tallied in 2013. Moreover, this was the weakest result since 2009.

The Central Bank sees the economy growing 4.8% in 2015 and expanding 6.0% in 2016. LatinFocus Consensus Forecast panelists expect GDP to expand 4.2% in 2015, which is down 0.3 percentage points from last month’s projection. For 2016, the panel expects the economy to increase 5.0%.


Author:, Economist

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Peru GDP Q4 2014

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


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