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Macroeconomic outlook report: Peru

Fourth quarter of 2017

During the fourth quarter of 2017, the y/y growth rate of Peruvian GDP stood at 2.24%, after registering a slowdown of 0.62 p.p. with respect to the previous quarter. On the other hand, the y/y growth rate of domestic demand accelerated by 2.26 p.p., standing at 4.26%. With regard to the labor market, the unemployment rate in the last quarter of 2017 was 6.44%, slightly higher than the rate registered in 3T17, and the y/y growth rate of employment decreased to 0.71%. The exchange rate between the Peruvian sol and the US dollar stood stable in 3.2525 S/./$. Finally, inflation registered a rate of 1.65%, 1.34 p.p. below the value registered in 3T17.

Macroeconomic overview

  • Peruvian GDP y/y growth rate experienced a decrease of 0.62 p.p. during the fourth quarter of the year with respect to the previous one, down to a rate of 2.24%. This behavior was due to the external demand, since the exports experienced a 0.51% year-over-year reduction, a deceleration of 7.55 p.p. compared to 3T17, while the imports increased its y/y growth rate to 7.06%. The average year-over-year growth rate experienced by the Peruvian economy in 2017 was 2.50%, below the rate registered in 2016.
  • Domestic demand grew at a y/y growth rate of 4.26% in the fourth quarter of 2017, accelerating by 2.26 p.p. when compared to the rate registered in 3T17. The causes of this growth were the increase in public expenditure, which accelerated its y/y variation by 7.25 p.p. in comparison with the previous quarter, and the rise in net investments, 5.30% higher than 3T17.
  • Regarding the labor market, the unemployment rate stood at 6.44%, slightly higher than the rate registered in 3T17. The employment rate registered in 4Q17 a growth rate of 0.71%, which was 2.66 p.p. smaller to the growth rate of the previous quarter.
  • The exchange rate between the Peruvian sol and the US dollar stood stable in 3.25 S/./$ when compared to the previous quarter.
  • Inflation stood at 1.65% after a decrease by 1.34 p.p., in line with the Central Bank’s objective, which is between 1% and 3%. The decline in inflation was motivated by the rapid reversion of the supply shocks, which affected agricultural commodities, and by the water deficit experienced by the end of 2016 and the phenomenon of El Niño Costero during the first quarter of 2017.

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© GMS Management Solutions, S.L., 2018. All rights reserved. The information contained on this publication is of a general nature and does not constitute a professional opinion or an advisory service. The data used in this publication come from public sources. GMS Management Solutions, SL assumes no liability for the veracity or accuracy of such data.