This result is mainly explained by the gradual recovery of domestic demand, particularly higher investments in mining and infrastructure, resilient household consumption, and the moderation of El Niño.
According to the National Institute of Statistics and Informatics (INEI), the Gross Domestic Product (GDP) of Peru registered a growth rate of 1.4% during the first quarter of 2024 compared to the same period the previous year. This was the highest growth rate since the last quarter of 2022.
The result is mainly explained by the gradual recovery of domestic demand, following rising mining and infrastructure investments, resilient household consumption and the moderation in the intensity of the El Niño weather phenomena.
Growth in mining (8.8%), construction (5.1%) and commerce (2.4%) overperformed on the supply side.
The overall GDP result was shadowed by a 0.3% fall experienced in March. This drop appears temporary and was associated among other factors to a calendar effect (fewer working days due to Easter), which would have subtracted more than 1 percentage point (pp) from the GDP for the month, especially in sectors related to domestic demand. A second factor in play was the deterioration of primary sectors such as fishing and primary manufacturing, still affected by a weak El Niño.
The Ministry of Economy and Finance (MEF) expects the recovery of GDP to continue in the second quarter of the year, in line with the evolution of leading indicators of economic activity.
For example, electricity production grew 2.4% annually as of May 12 and 2.7% in April, higher than that recorded in March (-0.8%). Likewise, investment indicators are recovering: national cement shipments increased 8% in April (March: -8%), while imports of capital goods grew 18.9% (Mar-24: -6.4%).
Furthermore, the dissipation of El Niño will generate conditions for greater growth in fishing activity and primary manufacturing, given that, to date, the anchovy catch already registers more than 60% of the total quota set for the first season. Finally, the convergence of inflation to the target range generates conditions for the flexibility of financing costs, in line with the reduction of the monetary policy interest rate.
In addition, the government continues to work on short- and medium-term measures to promote the reactivation of the economy and generate favorable conditions to encourage investments, the MEF assured.
PERU RECORDS ONE OF THE LOWEST INFLATIONS
Peru's annual inflation of 2.4% in April was the lowest among the region's main economies, below Chile (4.0%), Brazil (3.7%), Mexico (4.7%) and Colombia (7.2%).
As a reference, the inflation rate in the United States was 3.3% in the same month, reported the Central Reserve Bank of the Andean country (BCRP).
Similarly, core inflation --which excludes the variation of more volatile prices such as food and fuels– in Peru (3.0%) was the lowest among said countries in the region in April (Brazil, 3.8%; Chile, 3.2%; Colombia, 6.4% and Mexico, 4.4%).
It should be noted that a decreasing inflationary is observed throughout the region. For its part, inflation that excludes food and energy in the United States was 3.6 percent in April, higher than what was registered in Peru and Chile.
The local interannual inflation rate in April is the lowest since May 2021 (2.4%) and is already within the BCR's target range.
With April's result, the downward trend observed since the beginning of the previous year is consolidating. Interannual inflation reached 8.7% in January 2023.
For its part, the interannual inflation rate without food and energy fell from 3.1% to 3.0% between March and April, and is located at the upper limit of the BCRP ¹target range.
