Peru: GDP growth accelerates in Q3
November 24, 2016
Peru’s economy accelerated in the third quarter and grew 4.4% on an annual basis, which overshot LatinFocus participants’ expectations of 3.7% and was above Q2’s 3.7% increase. The positive result was mainly thanks to robust private consumption and strong external demand.
On the domestic side of the economy, private consumption expanded 3.5% in Q3, which was a notch higher than Q2’s 3.4% increase. Government consumption grew 1.7%, which was below Q2’s 4.1% expansion and the smallest increase in over five years. Meanwhile, fixed investment contracted 6.6%, which was a sharper decrease than the 3.0% fall registered in the second quarter. Going forward, domestic demand will become increasingly important, as Pablo Bréard, Vice-President of International Economics at Scotiabank highlighted,
“In 2017 [...] the drivers of growth will slightly change, with the positive contribution of infrastructure investment (in transport, communication and electricity sectors) as the government focuses on the execution of already approved plans. Domestic demand, influenced by continuous private consumption strength and improving investment prospects, will become a significant growth driver in the next 18 months.”
Exports of goods and services grew a strong 11.0% in Q3, which was above the 9.1% recorded in Q2 and came on the back of stronger demand for traditional Peruvian goods, such as minerals, coffee and fish products. Q3’s growth in exports was the best result since Q1 2012. Peru has seen strong export readings this year as copper mines started operating and gradually increased capacity, which has shored up copper extraction. Meanwhile, imports decreased 1.5%, the third consecutive contraction this year (Q2: -5.2% year-on-year). As a result, the external sector’s net contribution to overall economic growth edged down from 3.4 percentage points in Q2 to 3.2 percentage points in Q3.