Peru Economic Outlook. December 2025

Summary

The economy continues to perform well. Domestic demand accelerated in the third quarter, driven by private spending. This positive momentum and pension funds withdrawals point to output growth reaching 3,3 % in 2025. A slight moderation is expected in 2026 amid electoral uncertainty, GDP growth easing to 3,1 %.

Key points

• Key points:
• The external environment looks relatively favourable for Peru. Terms of trade are expected to stay at high levels throughout the rest of 2025 and into 2026, and the Fed is set to continue lowering its policy rate. And while global uncertainty remains—and will still drag on worldwide growth—it has eased.
• The fiscal deficit continues to narrow. After reaching the equivalent of 2,3 % of GDP in October, it is likely that the fiscal rule’s ceiling will be met this year. The deficit should decline further in 2026, bringing gross public debt to around 32 % of GDP. Peru’s fiscal position continues to compare favourably with that of other countries in the region, though it is not without risks.
• High terms of trade are also supporting the external accounts, which are expected to remain in surplus this year and next. This will, in turn, provide backing for the domestic currency, which is likely to strengthen against the dollar—not necessarily in the short term, given electoral noise, but after the elections, when the Fed will also be in the process of normalising its policy rate. The foreign exchange is expected to close this year and next within a range of 3,35 to 3,45 soles per dollar.
• Inflation is expected to end 2025 at around 1,5 %, a level not very different from today’s. In 2026, the appreciation of the Peruvian sol is likely to be more moderate and oil prices more stable, which means inflation will rise somewhat but remain comfortably within the target range.
• In this context, and after its last reduction in September, the monetary policy rate is expected to remain at 4,25 % going forward. The strength of domestic demand—particularly private spending—along with the boost pension funds withdrawals should provide, suggests that no additional monetary stimulus will be needed.

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