Divorce in economic and employment figures

In May, economic activity had a vigorous rise of 5.04%, compared to the same month in 2023 (period in which it contracted -1.43%). A month ago – April – GDP also grew by 5.28%, according to data from the National Institute of Statistics and Informatics (INEI).

Although these are expansion rates not seen in 30 months, The disaggregated data still show little consistency in growth, which is most clearly reflected in employment.according to consulted specialists.

Climate and fishing

The fishing sector, particularly industrial fishing, is in the spotlight, as it grew by 329.16% in the month of analysis. A year ago, this primary sector shrank by 70.60%. Current weather conditions are playing a decisive role, as improved levels of anchovy catches have been observed in just a few months, explains Juan Carlos Odar, director of Phase Consultores.

The progress of the fishing and manufacturing sectors – in particular the “processing and preservation of fisho”– contributed 2.48% of all monthly growth.

“Without this factor, the rate for the month would not have been 5.04%, but 2.56%,” Odar points out that a 5% rate can indeed hide a weak economy, precisely because of the seasonality of the activity that sustains it.

This is reinforced, according to the expert, by the fact that the other half of the growth in May is based on the agricultural and construction sectorswhich fell by 6.18% and 11.04% respectively a year ago. Therefore, both activities (labor-intensive) have rebounded rather than grown, due to the low base against which they are compared.

“That is where we talk about vulnerability and risk, in the sense of a fairly high rate but focused on a few sectors. This means that the dynamics of employment do not reflect the dynamics of production, and that domestic demand is not helping to improve business expectations and the current situation as reflected in the Central Bank survey,” he noted.

This is also the warning issued by Credicorp Capital, which points out that the economic rebound is still heterogeneous and “Not all sectors feel it at the same speed.”

Employment situation

Metropolitan Lima, in the April-May-June mobile quarter, reported 3 million 151,300 adequately employed workers, with all the benefits of law. This represents a growth of 5% compared to 2023, but the progress is 0% compared to the pre-pandemic period.

What did grow at a higher rate are the underemployed workers which totaled 2 million 309,900 in the capital. The increase was 4.3% compared to last year, but 32.3% compared to 2019.

“Of the employed population at the end of the first half of the year, 54 have adequate employment and 39 are underemployed,” INEI summarizes.

“What is happening is that less is being produced now than in 2022 and this has an effect on job creation. Fewer workers are needed than two years ago. There is a gap between the growth figures and the current situation of the company, which are improving, but slowly,” warned Odar.

Another relevant fact that shows the precariousness of employment is that the number of unemployed is still higher than before the arrival of the pandemic. At the end of June, the capital of Peru had 388,000 unemployed, 17.7% more than in 2019. The figure is also 6.2% higher than a year ago.

As for the level of the income in metropolitan Limain June 2024 they were located at S/1,975, still 6% below the same period in 2019.

Slowdown in June

Credicorp Capital estimated that the economy in the second quarter of 2024 would be closer to 4%, “which implies a slowdown in June.” It also said that in the second quarter of the year the primary sectors grew by around 7.6%, while the non-primary sectors grew by around 3%.

“We maintain our GDP rebound projection of around 3% for 2024. In line with the cyclical recovery“We expect the non-primary economy to gradually accelerate in the coming months,” predicted José Luis Nolazco, Economic Research Sub manager at Credicorp Capital.

“Growth in 2024 is expected to exceed 3%, but the outlook for employment and income is still weak”Odar pointed out

Mixed and moderate market reaction

● Although GDP growth exceeded expectations, the market reaction has been subdued and mixed.
● Guzmán, head of Investment Strategies at SURA Investments, explained that equities registered losses during the day (yesterday), with a 0.34% decline in the S&P/BVL index, which is located at a level of 30,031.60.
● Fixed-income securities, on the other hand, experienced marginal gains, as evidenced by a 1 basis point drop in the benchmark 15-year bond rate. Finally, the sol appreciated by 0.03% against the dollar, with the exchange rate standing at S/3.72.
● “We see little potential for appreciation in the sun, which is why we maintain a negative stance,” said SURA Investments.