Peru: Economic growth slows in fourth quarter
February 24, 2012
In the fourth quarter, GDP grew 5.5% over the same period the year before, which was below the 6.7% increase observed in the third quarter, but virtually in line with market expectations, which had seen GDP slowing to 5.4%. The quarterly reading represents the slowest growth rate seen since the last quarter of 2009. The deceleration in the last quarter was mainly the result of a deterioration in the external sector, although domestic demand also weakened over the previous period. Growth in total consumption remained virtually unchanged in the fourth quarter (Q3: +6.4% year-on-year; Q4: +6.3% yoy), as accelerating private consumption was offset by a slowdown in government spending compared to the previous quarter. Gross fixed investment accelerated from a 1.4% increase in Q3 to a 3.8% expansion in Q4. Meanwhile, the external sector weakened somewhat, as exports of goods and services decelerated from a 9.5% increase in the third quarter to a 7.4% expansion in the fourth. In contrast, imports increased 5.5% in Q4, faster than Q3's 3.9% growth rate. As a result, the external sector's net contribution to overall growth deteriorated from 0.9 percentage points in the third quarter to 0.1 percentage points in the fourth. Although the economy grew a healthy 6.9% in the full year 2011, this was still below the strong 8.8% expansion observed in 2010. In its December inflation report, the Central Bank projects the economy to expand 5.5% this year, before accelerating to 6.3% in 2013.
Author: Ricardo Aceves, Senior Economist