Peru: Economic and Political Overview
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An economic model country for the past two decades, Peru's growth peaked at an average of 6% between 2004 and 2012. Even though Peru faced economic difficulties in the past couple of years due to the pandemic, the country's economic situation has improved, with growth levels reaching an estimated 2.7% in 2022, mainly driven by a boost in domestic demand and household consumption. The Peruvian economy is expected to continue growing in the coming years, with the IMF predicting a GDP growth of 2.6% for 2023 and 3.2% for 2024.
Peru recorded a budget deficit of 2.8% of the GDP in 2022, a rate that's expected to remain somewhat stable in 2023 and 2024, at 2.6% and 2.3%. Inflation increased to 7.5% in 2022, but the Central Bank should tighten its monetary policy to get inflation rates to decrease the target of 2% in the coming years, with the IMF forecasting a decrease to 4.4% in 2023 and 2.5% in 2024. Furthermore, public debt decreased to 34.8% of GDP in 2022 and, although that rate is expected to slightly increase to 35.7% in 2023 and remain stable in 2024, Peru still has one of the lowest debt-to-GDP ratios of Latin America thanks to the prudential fiscal policy in force since the early 2000s. Although the pandemic has significantly impacted the Peruvian economy, the fiscal measures implemented by the government have been effective in boosting economic activity, which has been gradually recovering.
Although the unemployment rate in Peru doubled during the early stages of the pandemic, unemployment has been decreasing and, in 2022, it returned to pre-pandemic levels and reached an estimated 7.6% of the labour force. According to IMF estimates, the country's unemployment rate is expected to remain stable in 2023 and 2024, at 7.4% and 7.5%, respectively. However, the informal economy continues to employ a large part of the active population. Moreover, the country has high levels of inequality, with a significant concentration of wealth, and a poverty rate of 20.2%. About 7 million Peruvians now live in poverty, 44% of whom are in rural areas. There are serious regional disparities in poverty throughout the country, with the highest numbers being in the Andean and Amazonian regions.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 205.82 | 225.94 | 242.40 | 268.24 | 279.46 |
| GDP (Constant Prices, Annual % Change) | -11.0 | 13.6 | 2.7 | 2.4 | 3.0 |
| GDP per Capita (USD) | 6,145 | 6,679 | 7,094 | 7,773 | 8,018 |
| General Government Balance (in % of GDP) | -6.0 | -3.7 | -1.8 | -2.2 | -2.3 |
| General Government Gross Debt (in % of GDP) | 35.0 | 36.4 | 33.4 | 33.0 | 33.3 |
| Inflation Rate (%) | 1.8 | 4.0 | 7.9 | 5.7 | 2.4 |
| Unemployment Rate (% of the Labour Force) | 13.0 | 10.7 | 7.8 | 7.6 | 7.4 |
| Current Account (billions USD) | 2.45 | -5.10 | -10.89 | -5.71 | -6.31 |
| Current Account (in % of GDP) | 1.2 | -2.3 | -4.5 | -2.1 | -2.3 |
Source: IMF – World Economic Outlook Database, October 2021
Peru’s varied geography is reflected in the country’s economy. The abundance of resources is found mainly in mineral deposits in the mountainous regions, while its extensive maritime territory has traditionally yielded excellent fishing resources. However, due to its complicated geographical features (such as the arid coast, the rugged Andes and the hard-to-reach jungle), Peru has a rather small agricultural area, which occupies only 1.7% of the territory. Still, the sector is fairly significant compared to the size of the country's arable land. Agriculture contributes to 7% of Peru's GDP and employs 27.4% of the active population. The country’s main agricultural products are cotton, sugarcane, coffee, wheat, rice, maize, quinoa, and barley. Peru is also one of the world's leading exporters of artichokes, mangoes, citrus, avocado, and grapes. In 2022, Peruvian agricultural sector recorded a significant growth, mainly due to an increased production of bananas, corn, potato, and mango, among others.
The industry sector generates 35% of the GDP, employing 15.2% of the active population. Peru has a large and dynamic mining industry, mainly for copper and gold extraction. Peru has been a mining economy since colonial times, and the country is the world’s top producer of silver, the fifth producer of gold, the second producer of copper, and an important supplier of zinc and lead. Large mining has begun during the past years, which increased even more the importance of the mining sector. The country also has large reserves of natural gas and oil, although Peru is a net energy importer. The main manufacturing activities are textiles, consumer goods, food processing and fish products. Furthermore, although the Peruvian government has tried to disperse industrial production, the country's main industries are within the greater Lima area. In 2022, the industry sector continued seeing a significant recovery from the impact of the COVID-19 pandemic, bolstered by soaring growth in one of Peru's key sectors: mining.
The tertiary sector contributes 49.2% of the GDP and employs 57.4% of the workforce. The sector consists of tourism, financial services and telecommunication, all of which have boomed due to a combined effort from both the government and private sector. The tourism and construction sectors, particularly, are very well developed. Although the services sector was hit the hardest during the pandemic, it showed a significant recovery in 2022, especially in tourism, hotels, restaurants, transport, and entertainment.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 27.4 | 15.2 | 57.4 |
| Value Added (in % of GDP) | 7.0 | 35.0 | 49.2 |
| Value Added (Annual % Change) | 3.7 | 16.4 | 11.8 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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Latest Update: September 2023
