GDP growth gathers steam in Q2

GDP reading: GDP growth picked up to 3.6% year on year in the second quarter from 1.4% in the first quarter, marking the best result since Q1 2022 and above the Latin American average.

Drivers: Household spending increased 2.3% in the second quarter, which was above the first quarter's 1.2% expansion and was driven by lower inflation and higher employment. Public consumption picked up to a 5.7% increase in Q2 (Q1: +3.2% yoy). Meanwhile, fixed investment growth moderated to 2.8% in Q2, following 5.6% in the previous quarter. Double-digit public investment growth was partly offset by weaker private investment. Exports of goods and services contracted 1.8% in Q2, marking the worst result since Q4 2020 (Q1: +2.0% yoy), driven by lower goods exports. Imports of goods and services growth waned to 3.8% in Q2 (Q1: +5.5% yoy).

GDP outlook: Our Consensus is for GDP growth to slow but to continue to outpace the regional average in Q3. Growth should also stay above Peru’s own 10-year average, aided by easing price pressures and interest rates. However, political uncertainty will likely continue to cast a pall over private investment.

Panelist insight: On the reading and outlook, Goldman Sachs’ Santiago Tellez said: “The robust growth readings during the first semester of the year were driven by two factors. First, the dissipation of disruptive but transitory shocks to food supply and seafood manufacturing. Second, accelerated capital spending by incoming local governments who overcame previous budget implementation challenges. We expect the activity momentum to slow during the second part of the year as these temporary tailwinds lose steam. Beyond that, we expect positive but below-trend growth in the remainder of the year driven by still tight external and domestic financial conditions, relatively subdued business sentiment, moderate levels of mining investment, and weak governability conditions that will likely continue to bear on economic activity—especially on the soft private investment dynamics.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Peruvian government consumption projections for the next ten years from a panel of 24 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable government consumption forecast available for Peruvian government consumption.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Peruvian government consumption projections.

Want to get access to the full dataset of Peruvian government consumption forecasts? Send an email to info@focus-economics.com.