GDP records quickest expansion since Q1 2022 in the third quarter

GDP reading: GDP growth gathered traction to 3.8% year on year in the third quarter, up from 3.6% in the second quarter and marking an over two-year high. The upturn reflected improvements in private consumption, fixed investment and exports.

Broad-based expansion: Private consumption growth hit an over two-year high of 3.5% in the third quarter (Q2: +2.3% yoy). A stronger labor market and drawdowns from pension funds were behind the acceleration. Meanwhile, fixed investment growth improved to 6.8% in Q3, following the 3.1% increase recorded in the previous quarter. Public investment continued to far outpace private investment, though the latter was aided by stronger business sentiment and lower interest rates. Public spending growth waned to 4.6% in Q3 (Q2: +3.9% yoy). On the external front, exports of goods and services rebounded, growing 10.9% year on year in the third quarter, which marked the best reading since Q3 2021 (Q2: -1.4% yoy). In addition, imports of goods and services growth picked up to 7.0% in Q3 (Q2: +3.9% yoy).

Panelist insight: On the latest reading and outlook, Itaú Unibanco analysts said: “The activity recovery remains on track. Most business confidence indicators remain in positive territory, while imports of capital goods rose by 12% in the third quarter. However, the bouts of strikes related to security concerns pose transitory downside risks to activity.  We estimate that each day of protest has an impact of 0.1 pp of quarterly GDP. We revised our 2024 growth forecast down to 2.9% (from an above-consensus 3.1%), implying growth sequentially flat in 4Q24. A renewed US-China trade war poses downside risks to Peru’s growth outlook for 2025 and beyond.”

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