Peru’s GDP to Contract in March Due to Camisea Gas Crisis | RPP News
Peru’s Economic Outlook Darkens: Gas Crisis, El Niño, and Middle East Tensions Threaten March GDP
Peru’s economy faces a potential contraction of up to 1.1% of its Gross Domestic Product (GDP) in March 2026, according to estimates from Thorne & Associates. This concerning projection stems from a confluence of three significant challenges: a crisis in natural gas supply, the ongoing effects of the El Niño Coastal phenomenon, and escalating geopolitical tensions in the Middle East. The situation highlights Peru’s vulnerability to external shocks and internal infrastructure issues, potentially derailing a period of relative economic stability.
The disruption to the natural gas supply, originating from the Camisea gas fields, is currently identified as the primary driver of the projected downturn. While the government announced the restoration of natural gas supply following repairs to the Camisea duct on Friday, the impact of the mid-month rationing will significantly affect March’s economic performance. The curtailment of this vital resource has hampered production across various sectors, including industry and transportation.
Confirmed vs. Unclear: Gauging the Severity of the Economic Slowdown
Several economic consultancies offer varying projections for the March GDP contraction. Thorne & Associates forecasts a 1.1% decline, while BBVA Research anticipates a range of -0.5% to -1.0%. Phase Consultores provides a more moderate estimate of -0.2% to -0.8%. These differing assessments underscore the uncertainty surrounding the full extent of the economic impact. What remains unclear is the precise degree to which each factor – gas crisis, El Niño, and Middle East conflict – will contribute to the overall decline.
The last time Peru experienced a negative monthly GDP rate was in March 2024, according to data from the Instituto Nacional de Estadística e Informática (INEI). This suggests the potential March 2026 contraction could represent the most significant economic setback in two years. However, the specific details of the March 2024 decline were not provided in available sources.
Background: Peru’s Energy Dependence and Vulnerability
Peru relies heavily on the Camisea gas fields for its energy needs. These fields produce over 90% of the country’s natural gas, supplying major industries, the transportation sector, and more than 40% of the nation’s electricity. This concentration of production makes Peru particularly susceptible to disruptions at Camisea. The current crisis underscores the necessitate for diversification of energy sources and investment in infrastructure resilience.
The El Niño Coastal phenomenon, characterized by unusually warm sea surface temperatures, also contributes to the economic headwinds. El Niño typically brings heavy rainfall and flooding to Peru’s coastal regions, disrupting agricultural production and infrastructure. The extent of El Niño’s impact on March’s GDP remains difficult to quantify, but it is expected to exacerbate the challenges posed by the gas crisis and geopolitical instability.
The Middle East Conflict: A Ripple Effect on the Peruvian Economy
Escalating tensions in the Middle East, specifically the conflict involving the United States and Iran, are adding to Peru’s economic woes. The conflict is driving up global oil prices, increasing import costs for Peru, which relies on imported oil. Rising gasoline prices are already being felt by consumers and businesses, contributing to inflationary pressures. The specific details of the US-Iran conflict and its direct impact on Peruvian oil imports were not provided.
What Happens Next: A Potential Rebound, But Revised Projections
Despite the bleak outlook for March, consultancies anticipate a potential rebound in April, attributed to a “statistical rebound effect” as production normalizes following the resolution of the gas supply issues. However, the crisis is expected to leave a lasting mark on Peru’s overall economic performance for 2026.
Thorne & Associates has revised its 2026 GDP growth forecast down to 2.3% (from a previous estimate of 3.2%), while BBVA Research now projects growth of 2.9% (down from 3.1%). These downward revisions reflect the anticipated drag on economic activity from the combined effects of the gas crisis, El Niño, and the Middle East conflict.
Numbers That Matter: GDP Projections and Sector Impacts
- -1.1%: Projected GDP contraction for March 2026 (Thorne & Associates)
- -0.5% to -1.0%: Projected GDP contraction range for March 2026 (BBVA Research)
- -0.2% to -0.8%: Projected GDP contraction range for March 2026 (Phase Consultores)
- 90%: Percentage of Peru’s natural gas production originating from the Camisea gas fields
- 40%: Approximate percentage of Peru’s electricity sector supplied by Camisea gas
The crisis has particularly impacted industries reliant on natural gas, as well as the transportation sector. The extent of the impact on specific industries beyond these broad categories remains unclear.
The situation underscores the interconnectedness of the global economy and Peru’s vulnerability to external shocks. While the restoration of gas supply offers a glimmer of hope, the long-term economic consequences of this multifaceted crisis will likely be felt throughout 2026.