Macchu Picchu Peru

Peru GDP Q1 2019

Peru: Growth sinks to two-year low in Q1

GDP growth in the first quarter of the year fell to 2.3%, which was less than half Q4 2018’s 4.7% expansion and marked the slowest increase in two years. Weaker domestic demand and a more fragile external sector led the deceleration.

Domestic demand braked from a 3.5% expansion in Q4 to 1.7% growth in Q1. Fixed investment growth slackened dramatically, falling to 1.0% in annual terms in Q1 from Q4’s 5.4% year-on-year expansion, weighed down by plunging public investment in infrastructure from both the central and the local governments. At the same time, government consumption swung from a 2.2% increase in Q4 to a 2.5% contraction in Q1, due to shrinking spending by local governments. Private investment, however, gained some steam, supported by rising investment in the mining sector and favorable financing conditions. Moreover, private consumption continued to expand solidly (Q1: +3.4%; Q4: +3.8%), underpinned by strong credit growth, rising wages and growing employment in the private sector.

The weakening external sector, which contributed 0.6 percentage points to growth in Q1 following the 1.3 percentage-point contribution in Q4, was also behind the deceleration in the first quarter. Exports rose just 1.6% in Q1, following Q4’s 2.9% expansion. While exports of fishing products increased sizably, foreign sales of mining and energy fell considerably. Meanwhile, imports contracted 0.5% in Q1 following the sharper 1.8% contraction in the previous quarter, reflecting cooling fixed investment.

Growth is set to decelerate this year but should remain healthy nonetheless. Continued job gains and steady credit growth should underpin consumer spending. Moreover, solid growth in exports of commodities, positive business sentiment and rising infrastructure spending should support fixed investment. Lingering trade tensions and a weak Chinese economy, however, cloud the outlook.

Peru GDP Forecast

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest