Peru Economy Strengthens

Economic growth in Peru strengthened in the first quarter driven by an improvement in domestic demand. Growth was strongest in agriculture, fisheries, construction, other services and commerce. Q1 was up 3.2% versus a year earlier.

The Peruvian economy, one of the strongest and most consistent performers in South America over the past several decades, fell into a weak spell as economic conditions in the global economy deteriorated, FXStreet reported.

However, it seems that consistent economic policies are starting to relieve this situation, as economic growth improved to 3.2% on a year-earlier basis in Q1, the strongest year-over-year since Q3-2016.

Although segmented data from the demand side of the economy is not yet available, the supply side numbers, plus the release of domestic demand results, show a very strong domestic economy in the first quarter. Domestic demand increased 4.2% on a year-earlier basis in Q1.

The mining sector, which has been one of the leading sectors of the Peruvian economy, remained weak, growing only 0.6% during the quarter. Still, mining output increased 1.7%, while fuel production dropped 5.9%.

The strongest sector during the quarter was fisheries, up 6.1%, while agriculture and livestock output increased 5.7%. Likewise, construction increased a strong 5.1%, while other services did so at a 4.3% pace. Meanwhile, commerce output, which can be used as a proxy for personal consumption expenditures, increased at a slower but still respectable pace of 2.7%.

Manufacturing sector increased 1%, as raw materials manufacturing increased only 0.1% during the quarter, while non-primary products manufacturing improved 1.4%. Public utilities output increased 1.4%, all on a year-over-year basis.