© Reuters. FILE PHOTO: A building stopped during its construction process is pictured, as the spread of coronavirus disease (COVID-19) continues, in Lima, Peru March 24, 2020. REUTERS/Sebastian Castaneda
(Reuters) – Peru’s gross domestic product (GDP) shrunk 0.63% in February compared with the same month last year, the government’s INEI statistics agency said on Saturday, beating expectations by analysts who forecast a bigger decline.
It was a second successive month of decline after the economy began to contract in January following 22 months of growth, hurt by nationwide anti-government protests. Peru’s finance ministry, though, said growth should return soon.
Economic activity in February was hit by “continuity of social conflicts, which resulted in work stoppages, road blockades, market closures, among other issues, which occurred in some areas of the country,” INEI said in a statement.
Analysts interviewed by Reuters forecast a 0.90% decline in the GDP.
Economic activity in the world’s no. 2 producer was dented by a decline in several sectors, including construction, telecommunications, as well as finance and insurance.
Peru’s finance ministry said in a statement on Saturday that it expects “the economy to register positive rates again as of March, in line with the behavior of the leading indicators of economic activity”, helped by a decline in social unrest.
On Friday, Peru’s National Institute of Statistics (INEI) reported that the country’s Gross Domestic Product (GDP) declined 0.63% in February this year, a much better result than the 1.29% drop analysts had predicted.
The INEI said that despite the decline, the overall GDP growth between January and February was 0.42%, due largely to a tiny increase in agricultural production and some industrial production.
This result was a relief to many Peruvian economists, who had feared that the country’s already faltering economy could be pushed into a recession by the Coronavirus pandemic.
Industrial production declined 1.81%, compared to the same period last year, with the biggest drops in production reported in the chemical and petroleum industries. Construction also saw a 1.83% decline.
Agricultural production was the key factor in Peru’s economy seeing a slight increase overall. The industry saw growth of 5.21%, a result largely attributed to increased demand for basic food products.
It is hoped that future government stimulus plans, as well as a potential increase in agricultural exports, will help boost Peru’s economy in the coming months.
For now, the country’s overall economic outlook remains uncertain, but the latest GDP figures offer some hope that Peru’s economy can weather the current crisis.