Peru Country Risk Report Q4 2018
Economic activity in Peru will strengthen over the coming quarters, driven by investment and production gains in the mining sector.
We forecast real GDP growth will accelerate to 4.0% in 2018 and 3.9% in 2019, from 2.5% in 2017.
The government will enter a fiscal consolidation cycle, balancing higher spending on reconstruction and infrastructure against spending cuts in other areas of the budget.
The BCRP will maintain an accommodative monetary policy through end-2018; however, higher rising fuel and food costs will push inflation higher in 2019, leading the BCRP to gradually raise interest rates.
President Martín Vizcarra will likely see out the remainder of former President Pedro Pablo Kuczynski's term through 2021. We do not expect a shift away from current business-friendly policies under the new administration.
Major Forecast Changes
We have made no major changes to our forecasts this quarter.
A sharper-than-expected slowdown in the Chinese economy would pose significant downside risks to our growth, FX and balance of payment forecasts for Peru, given its exposure to China via export and investment channels.
Vizcarra's position remains fairly tenuous, with further political upheavals in the country potentially undermining investor sentiment.
- Executive Summary
- Core Views
- Major Forecast Changes
- Key Risks
- Country Risk Summary
- Economic Risk Index
- Political Risk Index
- Economic – SWOT Analysis
- Political – SWOT Analysis
- Economic Outlook
- Economic Growth Outlook
- Economy Seeing Robust Investment-Driven Growth
- GDP By Expenditure Outlook
- TABLE: PRIVATE CONSUMPTION FORECASTS
- TABLE: GOVERNMENT CONSUMPTION FORECASTS
- TABLE: FIXED INVESTMENT FORECASTS
- TABLE: NET EXPORTS FORECASTS
- TABLE: GDP GROWTH FORECASTS
- External Trade And Investment Outlook
- Current Account Deficit To Narrow On Mining Sector Gains
- Outlook On External Position
- TABLE: TOP FIVE GOODS EXPORTS IN 2017
- TABLE: TOP FIVE GOODS IMPORTS IN 2017
- Monetary Policy
- Rates On Hold Through End-2018
- Monetary Policy Framework
- Fiscal Policy And Public Debt Outlook
- Improving Revenues To Narrow Fiscal Deficit
- Structural Fiscal Position
- TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
- Peru Country Risk Q4 2018ContentsCurrency Forecast
- PEN: Short-Term Weakness, Long-Term Strength
- TABLE: CURRENCY FORECAST
- 10-Year Forecast
- The Peruvian Economy To 2027
- Economic Diversification And Private Consumption Underpin Long-Term Growth
- TABLE: PRIVATE CONSUMPTION KEY TO GROWTH OUTLOOK
- Political Outlook
- Domestic Politics
- Judicial Crisis Will Test Vizcarra's Weak Mandate
- TABLE: POLITICAL OVERVIEW
- Long-Term Political Outlook
- Regional Tensions The Main Threat To Stability
- Global Macro Outlook
- Strong Growth, But Greater Headwinds Too
- TABLE: GLOBAL MACROECONOMIC FORECASTS
- TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
- TABLE: EMERGING MARKETS, REAL GDP GROWTH, % y-o-y
- Index Tables
- TABLE: PERU – MACROECONOMIC DATA AND FORECASTS