Peru: GDP decelerates in Q1, but economy remains on solid footing
May 20, 2016
Peru’s economy lost some steam in the first quarter, as the expansions in both domestic and external demand were weaker than in the previous quarter. Nonetheless, GDP expanded a solid 4.4% in Q1 over the same quarter last year (Q4: +4.7% year-on-year), which slightly undershot market expectations of a 4.5% increase.
On the domestic side of the economy, domestic demand decelerated on the back of a sharp contraction in total investment. Private consumption registered a 3.6% expansion in Q1, which was a notch higher than Q4’s 3.4% increase. The result for private consumption is broadly in line with its average rate of expansion since Q2 2014. Government consumption grew 11.4%, which was down from Q4’s 12.8% increase. Meanwhile, total investment contracted 6.4%, which was a deterioration from the 2.7% decrease in Q4 and marked the largest contraction in over six years.
Exports of goods and services grew 7.8% in Q1, which came in below the record 10.8% expansion tallied in Q4. Meanwhile, imports swung from Q4’s 3.8% expansion to a 2.1% contraction. As a result, the external sector’s net contribution to overall economic growth picked up from 1.7 percentage points in Q4 to 2.5 percentage points in Q1 2016—the strongest contribution in over six years.
Sequential data showed that GDP in Q1 grew a seasonally-adjusted 1.0% over the previous quarter, which came in below Q4’s 1.5% increase.