Investment in Peru
Peru - Investment
GDP growth strengthens notably in Q1
Economic growth strengthened in the first quarter, coming in at 3.2% in annual terms. The reading marked the fastest pace of growth since Q3 2016 and was up from 2.2% in the last quarter of 2017. A stronger expansion in fixed investment and a less negative contribution from the external sector drove the acceleration.
Fixed investment expanded 5.1% in annual terms in Q1 on the back of rising public and private investment, following Q4’s weaker 2.8% increase. Public investment increased robustly, as public spending on reconstruction and maintenance was ramped up. Meanwhile, private fixed investment also increased, stimulated by improving terms of trade, specifically higher prices for minerals.
On the other hand, government consumption expanded 5.2% year-on-year, decelerating from the 8.3% increase recorded in Q4, mainly due subdued growth in spending by regional administrations. Private consumption in Q1 grew 3.2%, above Q4’s 2.6% rise. Household spending was underpinned by healthy credit expansion, rising wages, sustained consumer confidence and notably low inflation, although rising unemployment again limited the scope of the increase.
Thanks to higher commodity prices, the external sector’s contribution to growth improved, although it remained negative. Exports swung from a 0.7% contraction in Q4 to a 4.0% expansion in Q1, while imports increased 7.0% in Q1, broadly unchanged from Q4’s 7.1% increase. As a result, the external sector’s contribution to growth improved from minus 1.9 percentage points in Q4 to minus 0.7 percentage points in Q1. The healthy expansion in imports was driven by robust demand for capital goods.
The economy is expected to gain steam in the coming quarters, especially if the new government is able to scale up public investment to rebuild infrastructure damaged by the Coastal El Niño and improve the business climate. This should also boost consumer sentiment, underpinning household spending. Political instability remains the main downside risk to the outlook, however.
Peru GDP Forecast
Panelists surveyed for this month’s LatinFocus report expect GDP to expand 3.6% in 2018, which is unchanged from last month’s projection. For 2019, the panel sees the economy increasing 3.7%.
Peru - Investment Data
|Investment (annual variation in %)||7.9||-2.0||-5.2||-4.7||-0.3|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||5.09||-0.60 %||Aug 07|
|Exchange Rate||3.27||-0.06 %||Aug 07|
|Stock Market||20,223||-0.23 %||Aug 07|
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August 13, 2018
Peru’s trade balance recorded a USD 1,164 million surplus in June, the highest print so far this year, widening from May’s USD 544 million surplus as well as from the USD 790 million surplus recorded in the same month of last year. Growth in exports remained robust in June, coming in at 17.5% year-on-year following May’s strong 18.8% increase.
August 13, 2018
At its 9 August monetary policy meeting, the Central Bank of Peru (BCRP) decided to keep the policy interest rate unchanged at an eight-year low of 2.75%, matching market expectations.
August 3, 2018
The consumer confidence indicator published by GfK remained stable at May’s 90 in June.
August 3, 2018
The business confidence indicator ticked up to 59 in July from June’s 58, moving further above the 50-point threshold that separates optimism from pessimism. Driving the increase in business sentiment was an improvement in expectations on the near-future, while expectations on the medium-term remained unchanged.
August 2, 2018
Consumer prices in Metropolitan Lima increased 0.38% month-on-month in July, above June’s 0.33% rise.