Peru: Activity drops at a more moderate rate in the third quarter
GDP dropped at a softer pace of 9.4% year-on-year in the third quarter, above the 29.8% contraction recorded in the second quarter, as a phased easing of restrictions supported activity in the period.
The upturn reflected a broad-based improvement in private consumption, public spending, fixed investment and exports. Private consumption fell at a milder rate of 9.7% year-on-year in Q3 (Q2: -22.1% yoy), as the easing of social isolation measures bolstered household spending, despite the continued deterioration in labor market conditions. Fixed investment fell at a more moderate rate of 10.3% in Q3, compared to the 62.2% plunge logged in the previous quarter. Meanwhile, public consumption bounced back in the quarter, growing 4.3% (Q2: -8.8% yoy) as significant fiscal stimulus provided earlier in the year fed through to the wider economy.
On the external front, exports of goods and services fell 23.2% on an annual basis in the third quarter, which was above the second quarter’s 41.6% tumble. In addition, imports of goods and services slid at a slower rate of 21.0% in Q3 (Q2: -30.4% yoy).
On a seasonally-adjusted quarter-on-quarter basis, economic growth bounced back with GDP jumping 30.1% in Q3, contrasting the previous quarter’s 26.2% fall.
Despite the improvement in activity, Paulo Mateus, senior economist at Goldman Sachs, preached caution:
“Sequential growth slowed further in September and real GDP remains well below pre-Covid levels, suggesting that recovery towards pre-Covid levels will take place over an extended period (we expect full recovery only in 2022). The recent political turmoil, with President Vizcarra’s impeachment on November 9 followed by the resignation of President Merino on November 15, may further slow the recovery.”