- Peru: GDP growth is stabilizing at just over 3.0%
Peru’s GDP rose 3.2%, YoY, in August, surpassing our forecast of 2.5% growth (chart 1). The August figure does help reinforce our full-year 2025 forecast of 3.2%, however.
A few aspects of interest. The first thing to observe is that GDP growth is settling down around a constant cruising speed of just over 3%. GDP growth in July was 3.4%, YoY, and, based on high-frequency data, GDP growth in September should come in at least as high as August’s 3.2%, if not higher (depending on how resource sectors perform) (table 1).
A second aspect of interest is that most domestic demand indicators are outperforming. Construction, commerce, transportation, business services, government services and other services all rose 3.6% or more in August. There were, however, important exceptions. Industrial manufacturing continues to be weak, as it has been during most of the year, which is of particular concern. Hospitality services and financial services are also weakish, but come from even lower growth, so are actually accelerating slowly. The general message seeing these figures is that domestic demand continues to lead in growth (table 2).
The growth of resource sectors is much more mixed. Fishing declined sharply, down 11.4%, YoY, in August. However, August is an off-season month, so the growth figure is not indicative of trend. Mining is weak, high metal prices notwithstanding, as has been the case throughout most of the year. Mining has grown an underwhelming 2.1% in the year-to-August. In contrast, agriculture has continued showing moderate to high growth, rising a huge 9%, YoY, in August, and a robust 4.5% in the year-to-August. Encouragingly, the main driver of agricultural growth is agro-industrial goods for export, which is a high labour-intensive activity.
We expect the economy to continue coasting at 3% or mildly above for as far as the eye can see, which basically means until the 2026 change in government. Private investment appears to be holding up quite well, despite short-term political turmoil, and longer-term elections uncertainty. We reiterate that, for the time being at least, the main factors affecting growth are high metal prices and record terms of trade, and not current or future political events.
An additional factor looping into growth is a robust labour market. The unemployment rate in the key Lima market continues to softly trend downward over time, and is currently at a rather comforting 5.7% (chart 2).
Furthermore, based on payroll information followed by the BCRP, job growth in the country has been holding to over 6% consistently for nearly a complete year now. This is very encouraging (chart 3).
—Guillermo Arbe
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