Peru | Output growth forecasts for 2019 and 2020 have been revised downwards

Summary

Over the last few weeks, one of the risk factors on our output growth forecasts from mid-July, namely the higher political noise, has materialised. In this context, those output growth forecasts have been revised downwards.

Key points

• Key points:
• The higher local political noise of recent weeks and the increased social conflicts have deteriorated the business environment. As a result, uncertainty has risen. This, in turn, reduces visibility for investment decision-making and, probably, business confidence will keep weakening.
• In this context, we foresee that there will be greater caution on the business side, so we have revised downwards non-mining investment expected growth for 2019 and 2020. In addition, this will imply a lower expansion of formal private employment and payrolls, thus also affecting private consumption expected growth.
• The current uncertainty about how much time will the Executive remain in office will probably weaken public investment.
• As a result, we now anticipate a more contained expansion of domestic demand in both 2019 and 2020. With a more contained expansion of domestic demand, from both the private and public sectors, GDP growth forecasts are now at 2,5% for 2019 (before at 2,9%) and 3,4% for 2020 (before at 3,9%).

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