Peruvian Growth to Slow Following Q3, But Remain Regional Outperformer In 2023

• Fitch Solutions maintains its view that real GDP growth in Peru will reach 2.7% in 2022. Growth came in at 1.7% y-o-y in Q3 2022, in line with consensus expectations and a modest slowdown from Q2 2022’s 3.3% print.
• Economic activity was fueled by a sixth round of pension withdrawals in June, which drove stronger domestic demand than in Q2 2022. However, still-weak demand from China for Peruvian copper yielded a contraction in mining sector activity, slowing overall growth during the quarter.
• While activity will continue to moderate in the coming quarters, the Peruvian economy is still expected to grow by 2.5% in 2023, the strongest performance of the region’s major economies for the year.
• The growth will be driven by private consumption which will contribute 2.3 percentage points (pp) to headline growth in 2023, from 4.1pp in 2022 as well as investment growth which is expected to remain largely stable in 2023, contributing 2.4pp to headline growth compared to 2.3 in 2022, as the BCRP begins cutting its interest rate and pro-business policy is preserved by legislative gridlock.
• In addition, the introduction of a new president is anticipated to have a more severe impact on policy direction, including the introduction of less business-friendly initiatives, which would undermine investor confidence and drag on headline growth.

(Source: Fitch Solutions)