Country Forecast Peru October 2017 Updater

Country Forecast Peru October 2017 Updater

  • October 2017 •
  • Report ID: 325724 •
  • Format: PDF


  • The government, led by Pedro Pablo Kuczynski of the centre-right Peruanos Por el Kambio, will maintain a pragmatic approach to macroeconomic manage-ment and will not make radical changes to the current orthodox policy framework. However, political tension will endure, owing to conflict between the executive and the legislature, in which Mr Kuczynski's party holds just 17 of the 130 seats. Therefore, passage of legislation will depend on support from the opposition.
  • The government is likely to face challenges in the form of sporadic outbreaks of social unrest over extractive projects, rising urban crime and drug-trafficking, as well as potential violence perpetrated by the remnants of Sendero Luminoso, a terrorist group that had largely been defeated by 2000.
  • High levels of corruption and institutional inefficiencies will weigh on the business environ-ment and administrative effectiveness, as well as sustain public dissatisfaction with the political establishment. The broad reach of investigations into allegations of corruption will exacerbate political uncertainty, as there is a risk that members of both the government and the opposition will be implicated.
  • The economy will expand by 3.7% per year on average in 2018-22. Although among the fastest rates in the region, this is well below the highs of the past decade, when annual GDP growth often exceeded 6%. Growth will be lower in 2017 owing to sluggish public and private demand, and slowdowns in China and the US will curb GDP expansion in 2018 and 2020. Improved external conditions and more dynamic domestic demand will lift growth in 2021-22.
  • Despite low inflation, rising copper output, prudent fiscal policies and a manageable current-account deficit, Peru will remain vulnerable to fluctuations in external demand and commodities prices.
  • Population growth will slow slightly in 2018-22, but the labour force will continue to expand more rapidly than the overall population. The formal economy, despite expanding firmly in recent years, will struggle to absorb new entrants into the labour market, thereby sustaining a substantial informal sector, which will have a negative effect on productivity growth.
  • Peru is a fairly small (but growing) market, and opportunities will remain restricted by relatively low purchasing power, as well as high levels of poverty. Nonetheless, two decades of strong economic growth have fuelled the emergence of a growing middle class, particularly in the capital, Lima. This will continue to support growing consumption levels in 2018-22.


Loading...

We are very sorry, but an error occurred.
Please contact support@reportbuyer.com if the problem remains.