Macchu Picchu Peru

Peru Economic Forecast

Peru Economic Outlook

Year-on-year GDP growth cooled in Q4: Consumer spending and exports weakened amid high inflation and nationwide protests following an attempted coup by former President Pedro Castillo and his subsequent imprisonment. Available data suggests activity remains subdued in Q1. The unemployment rate rose in January, inflation remained stuck above 8% in January-February, and interest rates were higher than in Q4 in the same two months. More positively, in late February, the government announced the launch of several public-private projects worth around USD 9 billion to boost activity and calm social unrest. Meanwhile, many of the country’s copper mines resumed full activity and began sending the mineral ore to ports for export again in early March, following three months of reduced activity.

Peru Inflation

Inflation came in at 8.6% in February, down from January’s 8.7%. It thus remained significantly above the Central Bank’s target range of 1.0–3.0%. Inflation should gradually fall this year as the lagged effects of higher interest rates curb domestic demand and supply disruptions ease. A looser fiscal policy stance and potential FX weakness pose upside risks.

Peru Economic Data

2017 2018 2019 2020 2021
Population (million) 31.8 32.2 33.2 33.5 33.8
GDP (USD bn) 216 227 232 206 226
GDP per capita (USD) 6 7 7 6 6
GDP (PEN bn) 703 746 775 719 877
Economic Growth (Nominal GDP, ann. var. %) 6.6 6.0 4.0 -7.2 21.9
Economic Growth (GDP, ann. var. %) 2.5 4.0 2.2 -11.0 13.6
Domestic Demand (ann. var. %) 1.7 4.1 2.2 -9.9 14.7
Total Consumption (ann. var. %) 2.3 3.3 3.1 -7.3 12.1
Private Consumption (ann. var. %) 2.6 3.8 3.2 -9.9 12.4
Government Consumption (ann. var. %) 0.7 0.4 2.2 7.8 10.6
Fixed Investment (ann. var. %) -0.3 4.4 3.3 -16.2 35.0
Exports (G&S, ann. var. %) 7.6 2.2 1.1 -19.6 13.7
Imports (G&S, ann. var. %) 4.5 2.4 1.0 -15.8 18.4
Manufacturing Production (ann. var. %) -0.2 5.9 -1.7 -12.6 18.7
Commerce (ann. var. %) 1.3 2.5 2.5 -13.3 18.0
Unemployment (% of active population, eop) 6.5 6.1 6.1 13.8 7.8
Unemployment (% of active population, aop) 6.9 6.7 6.6 12.8 11.3
Fiscal Balance (% of GDP) -3.0 -2.3 -1.6 -8.9 -2.5
Public Debt (% of GDP) 24.7 25.6 26.6 34.6 35.9
Money (ann. var. of M2 %) 13.0 8.9 9.1 37.7 -4.0
Inflation (CPI, ann. var. %, eop) 1.4 2.2 1.9 2.0 6.4
Inflation (CPI, ann. var. %, aop) 2.8 1.3 2.1 1.8 4.0
Inflation (Core, ann. var. %, eop) 2.3 2.6 2.2 1.8 3.8
Inflation (WPI, ann. var. %, eop) -0.6 3.2 -0.1 1.6 13.6
Monetary Policy Rate (%, eop) 3.25 2.75 2.25 0.25 2.50
Exchange Rate (PEN per USD, eop) 3.2 3.4 3.3 3.6 4.0
Exchange Rate (PEN per USD, aop) 3.3 3.3 3.3 3.5 3.9
Current Account Balance (USD bn) -2 -3 -2 2 -5
Current Account Balance (% of GDP) -0.9 -1.3 -0.7 1.2 -2.3
Merchandise Trade Balance (USD bn) 7 7 7 8 15
Merchandise Exports (USD bn) 45 49 48 43 63
Merchandise Imports (USD bn) 39 42 41 35 48
Merchandise Exports (ann. var. %) 22.5 8.0 -2.2 -10.6 47.2
Merchandise Imports (ann. var. %) 10.2 8.1 -1.8 -15.6 38.9
Foreign Direct Investment (USD bn) 7 7 6 -1 6
International Reserves (USD bn) 64 60 68 75 79
International Reserves (months of imports) 19.8 17.3 20.0 25.9 19.5
External Debt (USD bn) 77 79 81 90 102
External Debt (% of GDP) 35.6 34.7 34.8 43.6 45.2

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