During 4Q20, although at a more moderate pace, Peru continued to reduce its y/y GDP contraction compared to the previous quarter, reaching a rate of -1.71%. This performance was mainly due to the increase in domestic demand following the implementation of the phases of the economic reactivation plan throughout the second, third and fourth quarters of the year. With regard to the labor market, the unemployment rate fell compared to the previous quarter, down to a rate of 15.13%. The year-over-year variation rate of employment creation in Peru reduced its fall, and stood at a rate of -19.65%. The Peruvian Sol depreciated against the dollar compared to the previous quarter, registering an exchange rate of 3.60 S/$. Moreover, the inflation rate increased in 4Q20 up to 1.95%.

 


Macroeconomic outlook report: Peru 4Q20

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Macroeconomic overview

  • During 4Q20, Peru reduced by 7.24 p.p. its y/y GDP contraction with respect to 3Q20, thus reaching a rate of -1.71%.
  • This partial recovery of the GDP was mainly due to the economic reactivation after the relaxation of the containment measures and the consequent reopening of different economic sectors. Domestic demand recovered as a result, and grew for the first time since 4Q19. All GDP components recorded increases, with the recovery of gross fixed investment being the most significant. Moreover, both public consumption and investment returned to pre-crisis levels.
  • Regarding the labor market, the unemployment rate decreased by 1.03 p.p. compared to the previous quarter, down to a rate of 15.13%. The year-on-year variation rate of employment in Peru stood at -19.65%, after decreasing its contraction by 10.63 p.p. with respect to the previous quarter. Nevertheless, it remained well below pre-crisis levels.
  • The average exchange rate of the Peruvian Nuevo Sol against the US dollar depreciated compared to the third quarter, and recorded an exchange rate of 3.60 S/$.
  • Finally, the inflation rate increased by 0.16 p.p. when compared to 3Q20, up to a rate of 1.95% in 4Q20.

For more information, click here to access the executive executive document in pdf (only avalaible in Spanish).