Peru: Economic growth remains robust in third quarter
November 28, 2011
In the third quarter, GDP expanded 6.6% over the same period last year, which came in below the 6.8% increase recorded in the second quarter but was in line with market expectations. The quarterly reading represented the slowest growth rate since the first quarter of 2010. The slowdown observed in Q3 reflected weaker growth in domestic demand, while the external sector improved over the previous three-month period. Domestic demand decelerated to a 6.3% expansion in the third quarter (Q2: +8.1% year-on-year), on the back of slower growth in private consumption and a marked deceleration in investment, which grew by only 1.4% (Q2: +4.7% yoy). Exports of goods and services decelerated from a 13.9% increase in Q2 to a 7.5% expansion in Q3. Simultaneously, imports grew 5.9% in Q3, well below the 19.5% growth rate observed in Q2. As imports slowed more markedly than exports, the external sector's net contribution to overall economic growth swung from minus 1.5 percentage points in the second quarter to plus 0.1 percentage points in the third. At the sector level, the third quarter deceleration reflected weaker growth in the non-primary sector, while the primary sector improved compared to the previous quarter. In its September inflation report, the Central Bank stated that it expects the economy to expand 6.3% this year. For 2012, the Bank expects economic growth to moderate to 5.7%.
Author: Ricardo Aceves, Senior Economist