Peru Economic Outlook. June 2025

Summary

Despite trade tensions, Peru’s economy is expected to grow by 3,1% this year, supported by record-high terms of trade, improved business confidence, and the construction of new copper mines. Output growth is expected to slow somewhat in 2026, to around 2,7%, mainly due to increased electoral uncertainty.

Key points

• Key points:
• Protectionism and uncertainty will weigh on global economic activity. In that context—and also due to supply increases—oil prices are expected to decline. This, along with still attractive copper and gold prices, will support Peru’s terms of trade.
• High terms of trade will bolster Peru’s external accounts, which will remain in surplus. Together with strong domestic demand, this will also contribute to the reduction of the fiscal deficit. However, there are certain concerns about public finances: several measures that reduce revenues or increase expenditures in the coming years are being discussed—or are about to be approved—which could lead to a gradual rise in gross public debt (still relatively low at present).
• In the foreign exchange market, the evolution of global trade policies will remain a source of volatility. Toward the end of the year, as domestic elections approach, the PEN will likely weaken, with the exchange rate ending 2025 within a range of 3,65 to 3,75 soles per dollar. In 2026, once electoral noise subsides, and supported by the external surplus and a normalisation trend in the Fed’s policy rate, the PEN is expected to strengthen.
• With economic activity around its potential level, inflation expectations anchored, and no climate anomalies anticipated, inflation will comfortably remain within the Central Bank’s target range.
• The policy interest rate currently stands at the nominal level we consider neutral (4,50%). A neutral monetary stance is consistent with the current cyclical position of the Peruvian economy. In our baseline scenario, the policy rate will remain at its current level over the coming months.

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