Peru’s economy made a remarkable turnaround in April, with its Gross Domestic Product (GDP) expanding by 5.28% compared to the same month last year, according to the National Institute of Statistics and Informatics (INEI). This marks the highest growth rate in 32 months, significantly exceeding both analysts’ predictions and government expectations.
Analysts polled by Reuters had anticipated a modest 1.4% growth, while government projections were set at 4%. The April surge comes after a contraction in the previous month, highlighting a robust rebound.
Key Growth Drivers
The impressive growth in April was primarily driven by substantial increases in agriculture and livestock production, which soared nearly 24% year-on-year. The manufacturing sector also contributed significantly with an 11.4% expansion.
However, the positive trend was offset by a decline in the mining and hydrocarbons sector, which fell by 4.34%. This decline, ending over a year of continuous growth, was mainly due to a 4.5% contraction in metallic mining activity.
Government Spending and Future Outlook
The Peruvian government’s increase in public spending played a crucial role in this economic boost. Between January and May, public spending surged by 29%, providing a substantial stimulus to the economy. The Economy Ministry highlighted that this spending is likely to keep economic activity dynamic in the upcoming months, especially with strong performances expected in fishing and primary manufacturing sectors due to the extraordinary anchovy capture in the north-central zone.
Economy Minister Jose Arista recently indicated that the economy grew by approximately 4% in both April and May, showing signs of recovery from the recession that began last year.
Conclusion
April’s unexpected GDP growth demonstrates Peru’s economic resilience and the effectiveness of increased public spending in stimulating economic activity. With promising projections for the coming months, Peru appears to be on a steady path to recovery. The continued focus on agriculture, manufacturing, and strategic government spending will be crucial in maintaining this upward trajectory.