Peru: Economic and Political Overview
In the context of robust economic growth spanning the past 25 years, Peru has encountered numerous setbacks in recent years. After contracting by 0.6% in 2023, the economy rebounded in 2024, with inflation staying well within the target range. Growth picked up to 3.3%, driven by a strong recovery in primary sectors, increased private consumption, and robust public investment. Growth is expected to slow in 2025 due to global policy uncertainty and pre-election tensions. Real GDP growth is forecasted at 2.9%, supported by continued private consumption growth, while public investment slows. Despite high metal prices, pre-election tensions are likely to hinder the recovery of private investment. Following this, growth is expected to stabilize around its potential rate of approximately 2.5% (data IMF).
In 2024, the external current account surplus improved further to 2.2% of GDP, supported by strong terms of trade. However, the fiscal deficit rose to 3.5% of GDP, exceeding the revised fiscal rule target of 2.8% due to lower tax collection and higher public investment. International reserves remained at a comfortable level of around 27% of GDP. The recent revision of the fiscal rule raised the fiscal deficit ceiling to 2.2% of GDP in 2025 and to 1.8% of GDP in 2026, up from 1.5% and 1.0%, respectively. The medium-term baseline scenario incorporates this new consolidation path, slightly exceeding the ceiling. Income tax regularization in 2025, bolstered by higher commodity prices in 2024, and a conservative growth projection in the 2025 budget, will contribute to this consolidation. Public debt – at 34.2% in 2024, from 33% one year earlier - is expected to remain on a stable trajectory in the coming years. Official government data pointed to a reduction in inflation to 1.9% last year amid lower energy prices. Inflation expectations for the next 12 months remain within the Central Bank’s target range of 2% ±1%.
Although the unemployment rate in Peru doubled during the early stages of the pandemic, unemployment has been decreasing since then. According to the INEI, Peru’s employed population surpassed 17.3 million in 2024, up 0.8% from the previous year, while the unemployment rate reached 5.6%, with higher unemployment among women (6.6%) than men (4.7%), as well as among young people aged 14–24 (11.5%) and those with university education (7.2%). However, the informal economy continues to employ a large part of the active population (more than 70% as per the World Bank). Moreover, the country has high levels of inequality, with a significant concentration of wealth, and a poverty rate of 32.2% (upper-middle-income poverty rate of USD 6.85/day - World Bank). There are serious regional disparities in poverty throughout the country, with the highest numbers being in the Andean and Amazonian regions.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 266.91 | 283.31 | 294.90 | 306.47 | 318.95 |
| GDP (Constant Prices, Annual % Change) | -0.6 | 3.0 | 2.6 | 2.3 | 2.3 |
| GDP per Capita (USD) | 7,913 | 8,316 | 8,570 | 8,819 | 9,087 |
| General Government Balance (in % of GDP) | -2.5 | -3.7 | -2.5 | -2.2 | -1.7 |
| General Government Gross Debt (in % of GDP) | 33.0 | 34.2 | 35.3 | 35.7 | 35.7 |
| Inflation Rate (%) | 6.3 | 2.5 | 1.9 | 2.0 | 2.0 |
| Unemployment Rate (% of the Labour Force) | 6.8 | 6.8 | 6.5 | 6.5 | 6.5 |
| Current Account (billions USD) | 2.22 | 0.78 | -0.17 | -1.99 | -2.93 |
| Current Account (in % of GDP) | 0.8 | 0.3 | -0.1 | -0.6 | -0.9 |
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 20% of the territory. Still, the sector is fairly significant compared to the size of the country's arable land. Agriculture contributes to 7.2% of Peru's GDP and employs 24% 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. After experiencing its first contraction in several years in 2023, agricultural and livestock production in Peru grew by 4.9% year-on-year in 2024, according to the Ministry of Agrarian Development and Irrigation (Midagri). This increase was driven by strong performance in the agricultural sector, which expanded by 6.8%, and the livestock sector, which rose by 1.8%.
The industry sector generates 33.9% of the GDP, employing 16.4% of the active population. Peru has a large and dynamic mining industry, mainly for copper and gold extraction. The country has been a mining economy since colonial times and is the world's second-largest producer of copper and silver, the seventh-largest producer of gold, and the second-largest producer of zinc. Additionally, the country is the third-largest producer of lead. Large mining has begun in 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. Peru's industrial sector grew by 3.9% in 2024, partially recovering from the 6.6% decline recorded in 2023. This growth contributed 0.44 percentage points to the country's economic expansion, making it the leading sector driving national GDP in the past year, according to the Institute of Economic and Social Studies (IEES).
The tertiary sector contributes 51.3% of the GDP and employs 59.7% of the workforce. The sector’s pillars are tourism, financial services and telecommunication, all of which have boomed due to a combined effort from both the government and private sector. Figures from the Ministry of Foreign Trade and Tourism (Mincetur) show that inbound tourism in Peru grew by 29% in 2024 compared to the previous year, adding 732,000 more visitors. This figure also reflects a strong recovery, reaching 74.5% of pre-pandemic tourism levels recorded in 2019. According to the National Institute of Statistics and Informatics (INEI), in 2024, business services grew by 3.6%, public administration and defence by 3.9%, other services by 3.6%, and other product taxes and import duties by 3.5%.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 24.0 | 16.4 | 59.7 |
| Value Added (in % of GDP) | 7.2 | 33.9 | 51.3 |
| Value Added (Annual % Change) | -3.9 | -1.3 | 0.6 |
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.}}
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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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