Published on Tuesday, September 30, 2025 | Updated on Tuesday, September 30, 2025

Peru economic outlook. September 2025

Summary

The Peruvian economy keeps performing solidly, supported by the strength of domestic demand. High terms of trade, the onset of new mining projects, and the recently approved pension funds withdrawal are expected to drive output growth to 3,1 % in both 2025 and 2026, despite the electoral uncertainty.

Key points

Key points:
The external environment is relatively positive for Peru: it has been among the least affected countries by U.S. tariffs, while terms of trade are expected to remain high and global financial conditions to become somewhat more favourable ahead.
The fiscal deficit will go down to 2,4 % of GDP in 2025 (from 3,5 % in 2024), primarily due to higher revenues stemming from strong terms of trade and a robust domestic demand. While a further significant reduction in 2026 is unlikely, gross public debt will remain below 33,5 % of GDP. Peru’s fiscal outlook continues to compare favourably with that of other countries in the region, though not without risks.
High terms of trade are also bolstering the external accounts, which are expected to remain in surplus this year and next. This supports the Peruvian sol, which is likely to strengthen against the U.S. dollar—not immediately, due to electoral noise, but after the elections, coinciding with the Federal Reserve’s process of normalizing its policy rate. The exchange rate is expected to end 2025 in a range of 3,50 to 3,60 soles per dollar, and 2026 in a range of 3,45 to 3,55.
Inflation should rise going forward, reflecting base effects, the normalisation of food price dynamics, and a milder decline in both oil prices and the exchange rate. Nonetheless, it will remain comfortably within the Central Bank’s target range, ending 2025 around 1,8 % and 2026 near 2,5 %.
This outlook for prices, together with the cyclical position of the Peruvian economy, is consistent with a policy rate at its neutral level. We estimate that the current policy rate (4,25 %) is already at neutral and thus will remain unchanged in the coming months.