The Peruvian economy will strengthen in the coming years, driven by production growth in the extractive sector, robust private consumption and infrastructure investment.
The incoming administration of President Pedro Pablo Kuczynski will boost infrastructure spending, bolstering the country's long-term growth.
The central government will post persistent, though narrowing, fiscal shortfalls due to lower government revenue growth.
Major Forecast Changes:
With exports outperforming our expectations and investor sentiment turning increasingly positive, we expect the Peruvian sol to trade higher in the coming quarters, although it will average lower on the year.
A sharper slowdown in the Chinese economy than we are currently expecting would pose significant downside risks to our growth, FX and balance of payments forecasts for Peru, given its exposure to China via export and investment channels.
|f = BMI forecast; Source: BCRP, BMI|
|Nominal GDP, USDbn||202.9||192.2||214.3||242.4|
|Real GDP growth, % y-o-y||2.4||3.3||3.8||4.2|
|Consumer price inflation, % y-o-y, eop||3.2||4.4||3.2||2.8|
|Exchange rate PEN/USD, eop||2.98||3.41||3.25||3.00|
|Budget balance, % of GDP||-0.3||-2.2||-2.2||-2.6|
|Current account balance, % of GDP||-4.0||-4.4||-3.3||-2.8|
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