Economic Outline

Economic Indicators

In the context of robust economic growth spanning the past 25 years, Peru has encountered numerous setbacks in recent years. Peru experienced an economic downturn as its GDP declined in the first and second quarters of 2023, attributed to decreased private investment and consumption, possibly stemming from protests and increased political uncertainties. Additionally, vital sectors such as agriculture, construction, and fishing were adversely affected by climatic events. The latest projections from the Banco Central de Reserva del Perú (BCRP) pointed to a negative growth of 0.5% in 2023, while projecting an annual growth rate of 3% over 2024/25 thanks to the recovery of some key industries, including agriculture.

The fiscal deficit was projected to increase to 2.1% of GDP in 2023, primarily driven by a significant decrease in fiscal revenues, which outweighs a lesser reduction in expenditures. The decline in revenues is largely attributed to lower economic growth and copper prices. Meanwhile, expenditures have decreased due to the winding down of pandemic-related spending, despite higher salaries, and the implementation of Con Punche Peru and measures to address climatic events. The IMF anticipates the deficit to decrease to 1.9% in 2024 and 1.6% in 2025, as revenues increase with the resurgence of economic activity, while current spending remains inflexible amidst the delicate political equilibrium. Fiscal discipline has allowed Peru to keep the public debt-to-GDP ratio at a low level: it stood at 33.9% as of 2023, and is expected to remain stable over the forecast horizon. Data from the Banco Central de Reserva del Perú pointed to an inflation rate averaging 3% in 2023 (compared to 8.5% one year earlier), with rate gradually returning towards the 2% target by 2025.

Although the unemployment rate in Peru doubled during the early stages of the pandemic, unemployment has been decreasing and, in 2023, stood at 7.6%. According to IMF estimates, the country's unemployment rate is expected to remain stable in 2024 and 2025, at 7.4% and 7.3%, 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 27.5% (World Bank). There are serious regional disparities in poverty throughout the country, with the highest numbers being in the Andean and Amazonian regions.

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