Peru | Economic activity continues to lose momentum

Summary

Economic activity grew by 1.4% year-on-year in July (June: 3.4%). The slowdown is mainly explained by the contraction of the primary component, both in mining and in hydrocarbons. On the non-primary side, a greater slowdown was observed compared to the previous month.

Key points

• Key points:
• In the primary component, Metallic Mining output contracted 6.2% due to the low grade of processed minerals and the impact of social conflicts, while the Hydrocarbons sector registered a contraction of 3.4%, affected by climatological factors that made transportation difficult.
• The moderation in the growth of the non-primary component is explained by the contraction of Non-Primary Manufacturing, linked to a decrease in the manufacturing of consumer and capital goods, and the moderation in the growth of the Construction sector.
• According to INEI, activity contracted 0.79% month-on-month in July (seasonally adjusted). If this level remains unchanged until the end of the year, GDP growth in 2022 would be 2.2%. In the remainder of the year, GDP growth will tend to moderate. We estimate that in the remaining five months the economy will grow between 1.0% and 1.5% year-on-year, in line with our forecast for the year as a whole of 2.3%.

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