Macroeconomic Forecast Peru

Although the Peruvian economy contracted at a clip of 1.1% y-o-y in Q209, the release of second quarter GDP data reaffirms our view that the economy has weathered the macroeconomic headwinds this year relatively well. Most notably, final household consumption growth remained firmly positive throughout H109, expanding on average at a clip of 2.8% y-o-y. In line with our expectations, government expenditure growth rose sharply this year, expanding by 8.5% y-o-y in H109 (8.9% y-o-y in Q209 alone). This marked the biggest surge in final public spending growth in four years, highlighting efforts by the Peruvian authorities to step up fiscal stimulus to prop up the economy.

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