Peru: Economy loses steam in first quarter
May 27, 2011
In the first quarter, GDP expanded 8.8% over the same period last year, according to data from the Central Bank. The reading represented a slowdown compared to the 9.2% increase observed in the fourth quarter but was broadly in line with last month's LatinFocus Consensus Forecast, which had seen GDP rising 8.5%. The first quarter result marked the slowest GDP growth rate in one year. The deceleration observed in the first three-month period was mainly the result of slower growth in domestic demand, as total consumption slowed to a 6.3% expansion in the first quarter from a 6.7% increase in the fourth and gross fixed investment decelerated sharply to a 12.3% increase in the first quarter from a 23.2% expansion in the final quarter of 2010. In contrast, the external sector improved somewhat compared to the previous quarter, amid faster export growth. Exports of goods and services accelerated from a 2.7% year-on-year increase in the fourth quarter to a 3.4% expansion in the first quarter, whereas imports slowed from a 23.4% expansion in the fourth quarter to a 13.5% increase in the first. As a result, the net contribution from the external sector to overall economic growth stepped up from minus 4.1 percentage points in the fourth quarter to minus 2.2 percentage points in the first. At the sector level, the first quarter reading reflected slower growth in the non-primary sectors, whereas the primary sector accelerated over the fourth quarter. The Central Bank anticipates that economic activity will grow 7.0% this year, before slowing to 6.5% in 2012.
Author: Ricardo Aceves, Senior Economist