Peru: Economic activity beat expectations again in May-18
July 17, 2018 (Investorideas.com Newswire) Economic activity grew 6.4% y/y in May-18, above the market consensus forecast (Reuters: 5.4% y/y), similar to the observed in Apr-18 (7.8% y/y). According to the INEI, the seasonally-adjusted series rose 0.2% m/m, below the Apr-18 figure of 1.8% m/m.
Both primary and non-primary sectors maintained strong dynamism in May-18:
- Production in primary sectors grew 9.2% y/y, although it decelerated vs Apr-18 (11% y/y, the best print in 11 months). The result reflected a strong growth in the fishing sector (26.7% y/y) and its impact on the primary resource manufacturing industry (20.4% y/y). Moreover, the mining and hydrocarbons sector showed a moderate improvement (1.9% y/y, Apr-18: 1.1% y/y) mainly due to a higher growth of hydrocarbon (12.5% y/y, Apr-18: 10.9% y/y) and mining production (0.2% y/y, Apr-18: -0.5% y/y).
- Production in non-primary sectors rose 5.5% y/y as: i) construction expanded 9.9% y/y, which remained close to the strong Apr-18 figure (10.5% y/y, the best print in six months), ii) the services sector continued to grow at a 5% y/y pace, iii) the commerce sector moderated its expansion to 3.3% y/y (Apr-18: 4.9%) y/y, and iv) after a strong rebound in Apr-18 (11.8% y/y), non-primary manufacturing grew 5.7% y/y.
GDP could post a 6% y/y growth in 2Q18, the strongest figure in 18 quarters. Leading indicators of Jun-18 show that: i) public investment of the General Government decelerated to 5.6% y/y (May-18: 10.2% y/y), ii) electric production expanded 4.4% y/y (May-18: 3.8% y/y), iii) the VAT collection rose 15.9% y/y (May-18: 13.8% y/y), and iv) most of economic expectations indicators published by the BCRP moderated vs May-18.
The economic growth would have peaked in 1H18. We do not rule out a lower dynamism during 2H18 in a context of subnational elections in Oct-18 (local and regional governments explain two-thirds of public investment).
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