Published on Wednesday, October 7, 2026 | Updated on Wednesday, October 7, 2026

Peru Economic Outlook. October 2026

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GDP is expected to grow by 2.9% in both 2026 and 2027. Despite the effects that El Niño is already having on growth, private investment and non-extractive sectors will continue to support economic activity. A strong rebound is expected in 2028.

Key points

Key points:
Tensions in the Middle East are keeping oil prices at elevated levels. Nevertheless, the international environment remains favourable for Peru: the AI boom is supporting copper prices—the country’s main export—thereby keeping terms of trade high. They are expected to remain elevated throughout 2026 and 2027.
The fiscal deficit stood at 1.0% of GDP in August. It will widen over the remainder of this year (to 1.7%) and in 2027 (to 2.3%) to accommodate expenditure associated with El Niño-related impacts. Gross public debt will remain at around 29% of GDP.
Under the baseline scenario, shipments through the Strait of Hormuz will gradually improve, while the Federal Reserve will raise its policy rate by less than currently anticipated by markets. Against this backdrop, and given that Peru’s external accounts surplus will remain significant, the Peruvian sol is expected to appreciate going forward, ending 2026 in the PEN 3.25–3.35 per US dollar range and 2027 between PEN 3.20 and PEN 3.30 per US dollar.
Inflation is well above the upper bound of the target range and is expected to end this year at close to 5.0%. Oil prices will remain high, private spending is strong, adverse weather conditions will affect some prices, and the year-on-year comparison base is low. In 2027, as energy flows through the Strait of Hormuz improve and weather conditions normalise, inflation will ease and end the year at around 2.2%.
A near-term Central Bank rate hike is difficult to rule out: monetary policy is expansionary, inflation and expectations are above target, and private spending is robust. We expect two 25bp rate hikes over the coming months, which will be unwound in the second half of 2027, once inflation returns to the target range.