The International Monetary Fund (IMF) conducted a mission in Peru from March 11 to March 26, 2025, to evaluate recent economic developments and establish policy priorities with Peruvian authorities and related stakeholders. According to the staff of the IMF, the visit resulted in a range of preliminary findings concerning the country's economy, which will form the basis for a more detailed report to be reviewed by the IMF Executive Board.
In the previous year, the Peruvian economy experienced an acceleration in growth, marking a rise of 3.3% aided by a resurgence in primary sectors, increased private consumption, and robust public investment. These factors contributed to keeping inflation within the target band established by the Central Reserve Bank of Peru (BCRP). Additionally, the fiscal deficit increased beyond forecasted levels due to reduced tax collection and heightened public investment.
Projections indicate that economic growth in 2025 will moderate to 2.9%, though pre-electoral tensions are expected to affect private investment recovery. Headline inflation is predicted to remain within the target band, while credit growth is anticipated to recover slightly amid limited private investment.
The IMF has highlighted several risks that could impact Peru’s economy, including political instability, social unrest, and external factors such as alterations in trade policy and fluctuations in commodity prices. Recent initiatives aimed at reviving private investment might benefit stalled mining and infrastructure projects. However, global economic uncertainties represent a major risk to forecasts.
The IMF outlines the importance of maintaining a neutral monetary policy stance, underscoring that the BCRP's current monetary policy is fitting given recent declines in inflation expectations. It also notes that efforts should be concentrated on meeting the 2025 fiscal deficit target, which may require supplementary measures to ensure a balanced consolidation.
Ongoing reforms within Peru's financial sector aim to tackle vulnerabilities associated with dollarized credit and enhance market resilience. The IMF suggests maintaining the prohibition on certain private pension withdrawals while proposing the introduction of retail investment products to help invigorate the domestic capital market.
For continued growth, the IMF underscores the potential benefits of unlocking investments in the critical minerals sector, noting Peru’s significant reserves of copper. Updating the fiscal decentralization framework and managing natural resource revenues could lead to more targeted development and equitable distribution of funds.
The mission thanked Peruvian authorities for their collaboration and discussions during the visit.