Peruvian GDP will grow 2.9% this year but will lose intensity by 2026, according to BBVA Research

For this year, BBVA Research expects the Peruvian economy to perform better: it raised the GDP result from 2.7 to 2.9%.

One of the external factors that will push the economy is the increase in metal prices, especially copper, which exceeded US$5.00 per pound and is forecast to maintain “attractive levels” in the coming quarters. Greater investment in green infrastructure and energy transition will keep copper at high prices.

Hugo Perea, chief economist at BBVA Research, maintains that for the second quarter they expect a more favorable environment in areas such as fishing and agricultural production due to the dissipation of climatological anomalies. Thus, GDP would reach 4% in year-on-year terms by June.

These tailwinds will translate into an increase in export ratios – adds Perea -: greater tax collection, growth and confidence, as well as a drop in the exchange rate and the fiscal deficit.

Likewise, Perea notes that the withdrawal of up to 4 UITs from the AFPs will also increase GDP by up to 0.5 percentage points. “It is not a minor impact and it will help growth,” he told the press.

What risks does the Peruvian economy carry?

The opportunities that would take GDP to 2.9% this year are diminished by the political weakening of the Executive Branch and the “counterproductive” proposals of Congress, according to BBVA Research.

These populist initiatives—such as the reduction of the VAT for hairdressers and the pension reform, mainly—fuel doubts among private investors. It is worth noting that the political instability and lack of popularity of President Dina Boluarte and Congress are causes for the reduction in credit reputation as already warned by S&P and Fitch.

“The truth is that in recent years we have seen a deterioration in the economic strengths that allowed us to grow rapidly in the first half of the 2000s,” summarized.

Along these lines, for 2025 in the medium term (2029) BBVA Research forecasts a GDP rate of 2.7%. Institutional weakness and political crisis do not allow poverty to be reduced, which would remain at 25.8% by 2029.