Sectoral business cycles in Peru and leading indicators for non-primary GDP growth

The paper describes the stylized facts of Peruvian business cycles since the 1990s. Following the NBER methodology, the paper identifies the peaks and troughs from 1994 to 2007. The YoY non-primary production growth turns out to be the benchmark. The paper shows that an aggregate common cycle in the Peruvian economy does not exist (asynchrony). Besides, not only the amplitude of sectoral business cycles has risen recently, but also they occur one after the other. Both results imply that the structural reforms implemented in the early 1990s increased the flexibility of the economy to absorb adverse shocks (resilience). Finally, the paper proposes a criterion for building a leading indicator index whenever an aggregate cycle is not available. This index is able to anticipate the start of the recessive phase in the second semester of 2008, which may be the beginning of the first aggregate common cycle in Peru.