Economy grows at softest pace since Q1 2024 in the second quarter

GDP reading: According to a preliminary reading, GDP growth lost steam in Q2, falling to 2.8% year on year from 3.9% in the first quarter and marking worst reading since Q1 2024. That said, the Q2 reading was still above the Latin American average for the sixth straight quarter.

Drivers: The downturn was broad-based, with private consumption, public spending, fixed investment and exports all weakening. Private consumption increased 3.6% in the second quarter, which was below the first quarter's 3.8% expansion. Government consumption growth moderated to 3.6% in Q2 (Q1: +4.8% yoy). Fixed investment growth softened to 7.7% in Q2, compared to 9.3% recorded in the previous quarter. Exports of goods and services fell 0.6% on an annual basis in the second quarter, which contrasted the first quarter's 9.2% expansion. In addition, imports of goods and services growth moderated to 12.7% in Q2 (Q1: +17.1% yoy).

Panelist insight: On the latest reading and outlook, Itaú Unibanco analysts said: “Economic activity continues to perform well. Business confidence indicators remain broadly positive, the investment recovery is ongoing, and terms of trade are still near historical highs. We have a GDP growth forecast of 2.9% for 2025 and 2.7% for 2026. While tariff-related uncertainty presents medium-term downside risks, the slightly improved growth outlook for China and the exemption of refined copper exports to the U.S. will help mitigate short-term risks to Peru’s economic activity.”

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