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Peru’s trade surplus widened to USD 880.8 mln in May, up from USD 550.8 mln a year earlier. Comparing the first five months of the year, the trade surplus increased to USD 6.06 bln from USD 4.7 bln in the same period a year ago.
Peru’s central bank held its benchmark interest rate at 7.75%. The bank stated that this pause doesn’t necessarily mean the end of its monetary tightening cycle, with future decisions depending on new inflation data. In June, the annual inflation rate cooled to 6.46% from 7.89% in May, and the core inflation rate slowed to 5.21% from 5.52% in May, though both rates remained above the inflation target range’s upper limit.
The Peruvian government has declared a 90-day national health emergency due to an unusual increase in Guillain-Barre syndrome cases, with 165 cases reported and four deaths. The government has outlined an action plan, with a budget of USD 3.3 mln to enhance patient care in health facilities and reinforce case-control and health personnel.
According to Peruvian finance minister Contreras, Private investment in the country likely declined by 7.1% in Q2 2023 due to political instability. However, Contreras anticipates that inflation will continue its downward trend in July after a sharp drop in June. Meanwhile, the central bank’s chief expressed caution about reducing interest rates too early in case inflation rebounds. He does not expect inflation to fall back to the central bank’s target range until next year.
Peruvian authorities are planning to maintain the presence of soldiers along a road used to transport minerals to prevent disruptions to some of the world’s top copper mines. The road has often been blocked by local communities staging protests to demand economic benefits. The plan is to keep the military along the road to work on infrastructure projects with local communities.
Peru’s finance ministry expects an economic rebound in the second half of the year as temporary shocks from unrest, flooding, and fertilizer shortage recede. Although the economy contracted by 0.24% in the first four months, growth is expected later in the year. However, potential disruptions from the El Nino weather pattern, which can cause flooding and agricultural upheaval, may impact the recovery. Given Peru’s significant exports of products like avocados, grapes, blueberries, and asparagus, such disruptions could substantially affect the economy.
Peru’s finance ministry expects an economic rebound in the second half of the year as temporary shocks from unrest, flooding, and fertilizer shortage recede. Although the economy contracted by 0.24% in the first four months, growth is expected later in the year. However, potential disruptions from the El Nino weather pattern, which can cause flooding and agricultural upheaval, may impact the recovery. Given Peru’s significant exports of products like avocados, grapes, blueberries, and asparagus, such disruptions could substantially affect the economy.
Peru economy grew by 0.3% in April, significantly underperforming expectations, despite the implementation of a second stimulus program. Further economic threats loom from potential El Niño-triggered flooding, agribusiness disruptions, and food inflation. The central bank conceded that year-end inflation is unlikely to reach the previously projected 3%. Meanwhile, president Dina Boluarte, under investigation for protest-related civilian deaths, stated that she plans to remain in power until 2026 despite Congress rejecting her early election proposal.
Peru central bank projects inflation to reach the 3% target next year, spurred by a significant slowdown in consumer prices. Despite the annual inflation in May surpassing the target range, the central bank has maintained its benchmark interest rate at 7.75%. Persistent core inflation and high inflation expectations limit the scope for potential interest rate cuts, even as the economy is predicted to decelerate this year.
Peru central bank held its benchmark interest rate at 7.75%. Despite the slowing annual inflation rate, which stood at 7.89% in May, down from 7.97% in April, the bank stated that the pause doesn’t imply an end to the tightening cycle. It projected a downward trend in the YoY inflation over the coming months, reaching near the target range by year-end.
Consumer prices in Peru saw a marginal rise of 0.32% MoM in May. The annual inflation rate declined for the fourth consecutive month to 7.89%, just under the forecasted 7.9%. The Central Bank of Peru is steadfast in achieving its year-end inflation target of 3%, despite it only decreasing by 77 bps since January. The bank has held its key interest rate steady at 7.75% for the past four months.
For the first time this year, Peru is tapping global investors by raising USD 2.5 bln through a sustainability bond. The funds generated will be allocated towards repurchasing existing sovereign debt and financing government expenditure. The bond, which matures in 2033, was introduced with a yield of 7.35%, marginally lower than the initial guidance of 7.7%. With the newly issued bonds, Peru aims to repurchase and potentially swap existing sol-denominated sovereign bonds due in the upcoming years. Thus far this year, Peru’s sol-denominated sovereign bonds have yielded 8.76%, outperforming a significant number of local-currency debts in emerging markets. Meanwhile, Peru’s USD notes handed investors 3.27% returns, beating the 2.21% average among peers.
Peru witnessed an economic contraction of 0.4% YoY in Q1 2023, marking the first negative growth since December 2020, primarily driven by a decline in domestic demand and exports. Government expenditure also declined by 1.7%. Notably, gross fixed capital investment plummeted by 8.5%, with private investment falling faster than public investment. Both exports and imports of goods and services contracted by 1.5% and 2.1%, respectively.
Amid increasing demand and appreciation for the Peruvian sol, finance minister Alex Contreras has planned a local currency bond issuance by September. This move symbolizes investor confidence in Peru’s economic stability, despite political unrest and a Q1 2023 economic contraction following President Castillo’s impeachment. Meanwhile, Contreras introduced a USD 1.6 bln incentive package and highlighted the role of public spending in bolstering the economy. Nevertheless, he emphasized the need for bond issuance by September due to subsequent financing challenges.
The IMF has completed the mid-term review of Peru qualification under the Flexible Credit Line (FCL) arrangement, approved in May 2022 for approximately USD 5.3 bln. Given the continued global risks and uncertainty, Peruvian authorities intend to maintain the current level of access and continue to consider the arrangement as precautionary.
Peru economy returned to expansion in March following two months of decline, albeit growth was significantly lower than predicted. Economic activity increased by 0.22% YoY. The Q1 2023 contraction of 0.43% and slow March growth underscore the lingering impact of large-scale protests that disrupted the economy. Additional challenges include flooding in the north due to warming ocean waters, potentially exerting further pressure on the economy throughout the year. Despite the unrest, Peru’s central bank has maintained its benchmark interest rate at 7.75% for the past four months.
Peru central bank kept its key interest rate at 7.75% for the fourth consecutive month. Annual inflation eased to 7.97% in April, aligning with the bank’s target. Future rate hikes are not ruled out, as the bank aims to achieve a 3% inflation rate by year-end. The finance ministry anticipates a return to economic growth, with March activity figures to be published next week.
Peru annual inflation rose 7.97% YoY in April, above expectations but decelerating below 8% for the first time in a year. Monthly, inflation rose by 0.56%. Peru’s central bank president noted that officials are determined to bring inflation back to 3% by year-end but cautioned that the downward trend would be bumpy. The central bank has held its key interest rate at 7.75% for three consecutive months, and it will reassess its benchmark rate at its upcoming monthly meeting.
Peru finance minister announced that historic protests had a “huge” impact on the economy, leading to a reduction of growth forecasts for 2023 from 3.1% to 2.5%. MMG’s Las Bambas mine reported that it had almost USD 1 bln worth of copper stuck at its mine due to protests blocking transportation to a seaport, which would take until the end of the year to transport if no new disruptions occur. Meanwhile, the airport in Juliaca reopened this week following the deadly protests in January.
In response to an influx of Venezuelan migrants from neighboring Chile, Peruvian president Dina Boluarte declared a state of emergency in all of Peru’s border regions and announced her intention to seek a constitutional amendment permitting a permanent military presence in border areas. According to the IMF, about seven million Venezuelans have fled their country due to a long-standing economic crisis, with Peru receiving the second-largest share after Colombia, with 1.5 million migrants.
In February, Peru exports decreased by 18% compared to the same month in the previous year, totaling USD 4.7 bln due to lower volumes and prices and transportation issues for copper and gold companies. Meanwhile, imports totaled USD 3.8 bln, down by 4% from last year, primarily caused by a decrease in industrial input volumes. Over the twelve months ending in February, Peru maintained a trade surplus of USD 8.6 bln.
Peru Congress will vote on March 30th on whether to discuss the impeachment of president Dina Boluarte based on allegations of “permanent moral incapacity” following anti-government protests resulting in dozens of deaths. The impeachment motion was presented by a group of leftist lawmakers in January. Boluarte was sworn in as president in December after former president Pedro Castillo was impeached and arrested for trying to suspend Congress.
Peru economy shrank by 1.12% YoY in January, compared to a median forecast of -0.9%. That was due to anti-government protests that affected industries such as mining, agribusiness, and tourism. It was the first economic contraction since February 2021, when the activity fell by 3.8%. The central bank has halted interest rate hikes for two consecutive months due to rising uncertainty, potentially affecting investment and consumption. The unemployment rate in Lima decreased to 7.3%, compared to a median forecast of 8.3%.
Peru’s trade surplus declined to USD 1.069 bln YoY in January from USD 1.237 bln in the previous year. Exports fell by 14.5% YoY, mainly driven by falling shipments of traditional goods, while imports declined by 7.2% amid lower purchases of capital and consumption goods. Separately, Guatemala’s trade deficit widened to USD 1.411 bln in January, up from a revised deficit of USD 1.144 bln in the previous month.
Peru central bank kept its benchmark interest rate steady at 7.75% for the second consecutive meeting, citing a brighter inflation outlook, cooling economic growth, and reduced violent protests. However, officials noted that this doesn’t necessarily mean an end to the series of interest rate hikes and will depend on inflation and its causes, including the impact of recent protests. The country’s inflation rate stood at 8.66% YoY in January, above the target range, and is forecast to trend downward from March.
Peru’s government, the second-biggest producer of Copper and Zinc, expects that shipments of the commodities will begin to normalize within days as the country’s worst street protests in decades ease. The full resumption of shipments will come as a relief to tight global metal markets. Officials identified a total of USD 6.9 bln in mining investment this year and next.
Peru’s annual inflation unexpectedly slowed to 8.65% in February as anti-government protests began to abandon their disruptive roadblocks after weeks of unrest. The country’s central bank left its benchmark interest at 7.75% last month, following 18 consecutive hikes. Some analysts expect Peru may be one of the first major South American economies to start cutting interest in the near term due to the damage to the nation’s mining, agriculture, and tourism sectors. On Tuesday, the government announced the launch of more than 30 public-private projects worth nearly USD 9 bln to revive the economy.
Peru economy expanded steadily in the fourth quarter of 2022, growing 1.7% YoY despite the country’s political turmoil. The growth was primarily driven by domestic demand, gross fixed capital, and soaring public investments, while government expenditure contracted by 4.1% during the same period.
Peruvian finance minister Alex Contreras stated that Peru’s economy could have grown by 3% in 2022 if it were not for the mass unrest that began in December. The country experienced slowing growth towards the end of the year and ended with a growth rate of 2.68%. Contreras also noted that investor uncertainty was diminishing following a recent trip to Italy.
Peru’s economy advanced by 0.86% YoY in December, declining from a 1.86% rise in November and defying market forecasts of a 1.25% gain. That marked the weakest growth rate since a 4.1% contraction registered in early 2021 amid ongoing public unrest. In 2022, the country’s economic activity rose by 2.68%, falling sharply from the 13.61% growth recorded in 2021.
