Peru‘s economy is projected to experience significant growth in 2025, driven by strategic government policies, a resurgence in key sectors, and improvements in public services. The Multiannual Macroeconomic Framework for 2025-2028 highlights economic reactivation as a central objective, aiming to stabilize macroeconomic conditions while fostering public and private investment. This proactive approach is designed to maintain a lower fiscal deficit and public debt, creating a conducive environment for attracting domestic and foreign investments amid ongoing political stability and infrastructure development challenges.
Key sectors anticipated to propel economic growth include mining, manufacturing, and construction, with the mining industry expected to remain a cornerstone due to its substantial contribution to exports and GDP. In 2024, the mining sector showed signs of recovery with a 2 percent expansion, bolstered by increased demand for key minerals like copper and gold. Meanwhile, the construction sector demonstrated resilience, growing 3.6 percent the previous year due to heightened private investment and ongoing public infrastructure projects. Furthermore, the services and commerce sectors are also set for expansion, supported by rising economic activity and enhanced consumer demand.
While the outlook for 2025 is positive, it is essential to consider the underlying challenges that could impede growth. Economic vulnerabilities, including a reliance on commodity prices and structural deficiencies, pose risks to sustained development. Significant regional disparities and environmental sustainability concerns must be addressed to ensure equitable and inclusive growth across the country. Nonetheless, with a projected GDP growth rate of around 3 percent and a stabilizing inflation rate of approximately 2 percent, Peru aims to reinforce its position as a key player in the Latin American economy as it navigates these challenges.
Overview
Peru’s economy is projected to experience robust growth in 2025, driven by government policies, key sectors, and improved public services. The Multiannual Macroeconomic Framework for 2025-2028, approved by the Council of Ministers, emphasizes economic reactivation as a central theme, aiming to ensure macroeconomic stability while promoting public and private investment. The government is focused on maintaining a lower fiscal deficit and public debt, fostering an environment of legal stability and social peace, essential for attracting national and foreign investments.
Key sectors expected to contribute significantly to economic growth include mining, manufacturing, and construction. The mining sector, in particular, remains a strong contributor, with expectations of continued strong exports of mined products. The construction sector has also shown promise, having grown 3.6 percent in the previous year due to increased private investment and public infrastructure projects. Additionally, the services and commerce sectors are projected to expand as economic activity heightens, further bolstering overall growth.
The anticipated growth of approximately 3 percent in 2025 follows a successful year in 2024, where the economy was buoyed by a recovery in domestic demand, improved private investment, and enhanced public service execution. Inflation rates are projected to stabilize around 2 percent, supporting a favorable economic environment. With these dynamics in play, Peru is set to reinforce its position as a key player in the Latin American economy, poised for a positive growth trajectory.
Key sectors contributing to growth
Peru’s economy is poised for growth in 2025, driven by several key sectors that are anticipated to contribute significantly to the national GDP. These sectors are bolstered by supportive government policies, strategic trade agreements, and improved public services, which foster economic resilience and expansion.
Manufacturing sector
Manufacturing plays a vital role in Peru’s economic landscape, accounting for approximately 34 percent of the GDP and employing about 17 percent of the workforce. Despite facing challenges, such as a notable contraction in 2023, the sector has shown resilience. Key manufacturing activities include textiles, food processing, and fish products. As infrastructure improves and domestic consumption rises, the manufacturing sector is expected to rebound, contributing positively to economic growth.
Mining sector
The mining sector remains a cornerstone of Peru’s economic framework, contributing substantially to GDP growth. In recent years, Peru has emerged as a leading global producer of key minerals, particularly copper and gold. In 2024, primary sectors recorded significant growth, with the mining industry witnessing a resurgence, evidenced by a 2 percent expansion following previous contractions. The development of this sector is critical, as it not only provides employment but also boosts export revenues, which are vital for economic stability.
Agriculture and agribusiness
The agricultural sector has traditionally been a significant component of Peru’s economy. While it faced challenges in 2023, including a contraction due to adverse weather conditions, recovery is anticipated in 2025 as the country focuses on enhancing agricultural productivity through innovation and investment in precision agriculture technologies. This aligns with global trends towards sustainable practices and could facilitate export growth in high-demand products such as fruits and vegetables.
Services sector
The services sector, which includes tourism, financial services, and telecommunications, is also critical to economic growth, contributing nearly 50 percent of GDP and employing a significant portion of the population. With ongoing improvements in infrastructure and increased domestic and international tourism, this sector will likely see continued expansion. Moreover, the digital economy and technology services are areas of potential growth, driven by rising consumer demand and innovations in artificial intelligence and machine learning.
Government policies
Economic resilience and challenges
Peru’s economy has shown considerable resilience in the face of multiple shocks over the past several years, aided by robust macroeconomic policies. Following a steep decline during the COVID-19 pandemic in 2020 and a rapid recovery in 2021, economic growth slowed significantly in 2022 due to the withdrawal of policy stimulus, deteriorating external conditions, and disruptions in major mining operations. Although inflation has recently decreased, it remains above target levels, while unemployment and poverty rates gradually decline but still exceed pre-pandemic figures.
Structural reforms and governance
To foster economic stability and growth, the Peruvian government must work collaboratively across the political spectrum, focusing on restoring confidence and accelerating necessary structural reforms. These reforms tackle inequality, poverty, education, health, and pension system deficiencies. The government launched the National Competitiveness and Productivity Policy (PNCP) in January 2019, emphasizing improving physical and human capital and the efficiency of markets and institutions. The PNCP aims to mobilize investments totaling approximately US$160 billion by 2025 to bridge the infrastructure gap and align with standards of countries like Japan and Singapore.
Foreign investment and economic diversification
The Peruvian government actively seeks to attract foreign and domestic investment, recognizing its importance in driving economic growth. Progress in the 1990s toward achieving economic stability initially spurred international investment; however, delays in privatizations and political uncertainties led to a slowdown in foreign capital inflows. To counter this, the government has prioritized investment promotion under successive administrations, acknowledging that diversification beyond reliance on commodities, particularly copper, is essential for sustained growth and resilience to external shocks.
Infrastructure development
Infrastructure investment is pivotal for achieving economic growth and enhancing public services. The government has announced plans for substantial public investment in infrastructure projects, including transport, energy, and telecommunications, to address economic performance deficiencies. Establishing public-private partnerships (PPPs) is a strategic approach to leverage additional resources and expertise in infrastructure development, with an extensive portfolio of projects already outlined for implementation.
Trade agreements
Peru has strategically engaged in numerous trade agreements to enhance its economic landscape and foster growth and international relations. The country has signed various bilateral, regional, and multilateral agreements facilitating trade and investment, significantly impacting its economic development.
Free Trade Agreements (FTAs)
Peru has established a robust network of FTAs, which have played a crucial role in diversifying its export market and enhancing economic integration. Among these, the Peru–United States Trade Promotion Agreement, signed on April 12, 2006, and implemented on February 1, 2009, is among the most significant. This agreement aims to eliminate trade barriers and foster private investment between the two nations, incorporating labor, environmental policies, and intellectual property rights provisions. In the first three years of the FTA with the United States, 488 new tariff headings for non-traditional exports were registered, illustrating its positive impact on Peru’s export dynamics.
Furthermore, Peru’s FTA with China, which has been in force since March 1, 2010, offers zero-tariff treatment to over 90 percent of traded items, underscoring the importance of this relationship. In 2022, bilateral trade with China reached US$34.62 billion, highlighting China’s role as Peru’s largest trading partner for nine consecutive years. Other notable FTAs include agreements with Canada, Chile, Mexico, and members of the Southern Common Market (MERCOSUR).
Regional trade agreements
Peru is also a member of the Andean Community of Nations (CAN), which includes Bolivia, Colombia, and Ecuador. This regional trade bloc aims to promote economic integration and cooperation among its members. Additionally, Peru is a key player in the Pacific Alliance, established in 2011, which includes Chile, Colombia, and Mexico. It seeks to facilitate the free movement of goods, services, capital, and people among its members. The Economic Complementation Agreement 58 (ACE 58) with MERCOSUR was signed to establish a legal framework for trade between member countries. It aims to reduce tariffs and non-tariff barriers that hinder trade in goods and services.
Bilateral investment agreements
Beyond FTAs, Peru has signed agreements to promote and protect investments with 28 countries across various continents. These agreements are crucial for providing legal stability and protection to foreign investors, encouraging investment inflows into the country. The Peruvian Constitution and the Framework Law for Private Investment assure investors of stability in key areas such as labor contracts, export promotion, and taxation, enhancing Peru’s attractiveness as an investment destination.
Improved public services
Investment in infrastructure
Peru’s government has initiated significant investment projects to enhance public services, particularly in infrastructure. In early 2018, the government announced plans for new hard infrastructure projects valued at approximately US$11 billion. The national agency ProInversión has been actively promoting public-private partnerships (PPPs), with a portfolio of 58 projects totaling US$10.3 billion for the 2019-2021, focusing on transport, telecommunications, and sanitation among other sectors.
Health care accessibility
Access to quality health care is another critical area for prioritizing improvements. The government is committed to universal health coverage, as highlighted in the national planning documents and the 2021 National Agreement. This includes efforts to enhance telehealth and digital health services, which are vital for extending health care access, particularly in underserved regions. The importance of health services has been underscored by the COVID-19 pandemic, which has driven home the need for accessible health care as a fundamental driver of development.
Education and skills training
Investment in education and skills training is also a focal point for improving public services in Peru. The signing of the Bicentennial National Pact in Education in January 2019 underscores a commitment to enhance education and vocational training for workers. This initiative aims to bolster workforce readiness and ensure that the labor market can effectively respond to the evolving economic landscape.
Digitalization and connectivity
Integrating digital technologies into public services is another vital aspect of government strategy. Efforts are being made to close gaps in digital connectivity and improve digital literacy among the population. By promoting information and communication technologies, the government aims to enable both formal and informal economic actors to benefit from digital advancements, thereby fostering greater economic participation.
Social protection and labor market support
The government is enhancing social protection coverage, including social security, healthcare, and pensions, to support the workforce further. This initiative ensures equitable access to economic opportunities and improves workforce welfare, particularly for vulnerable populations. Strengthening labor market information systems and enhancing public employment services are part of the broader strategy to facilitate full and productive employment.
Challenges to growth
Despite optimistic projections for Peru’s economy in 2025, several significant challenges remain that could hinder sustained growth.
Economic vulnerabilities
Peru’s economy has experienced declining potential growth since the end of the commodity boom, with an average potential growth rate dropping from 5.7 percent in the early 2000s to around 3.75 percent as estimated by the IMF for the medium term. This decline is primarily attributed to low productivity levels and insufficient capital investments. The economy remains sensitive to fluctuations in international commodity prices, particularly copper, which poses a risk to growth stability and highlights the urgent need for diversification across various sectors.
Structural challenges
The country faces significant structural challenges, including a considerable infrastructure gap, limitations in human capital, and inefficiencies within governmental institutions. These issues contribute to bottlenecks in productivity and competitiveness, which are critical for achieving higher growth rates and development objectives. Moreover, the existing political environment complicates the implementation of necessary reforms. Political fragmentation, characterized by the prevalence of small and unstable parties, makes it difficult for governments to pass substantial legislation or pursue effective policy agendas.
Regional disparities
Regional inequality is another pressing challenge. Although Peru has notably reduced income inequality nationally, substantial disparities persist between urban and rural areas. For instance, while over half of urban households have access to essential services like piped water and electricity, only 6 percent of rural households enjoy similar access. This inequality can exacerbate social tensions and limit economic growth by restricting opportunities for large population segments.
Environmental considerations
Economic growth’s environmental sustainability is also a concern. Efforts to advance industrialization and innovation must be balanced with environmental protections to avoid potential conflicts with the Sustainable Development Goals (SDGs). Investments in infrastructure and new industries should consider their environmental impact, as unchecked industrial growth may compromise ecological integrity and public health, countering progress toward poverty reduction and economic inclusion.
Future outlook
Barring significant political or environmental disruptions, economic forecasts for Peru indicate a stable outlook for 2024 and an optimistic trajectory towards 2025. Analysts suggest that continued recovery in investment, particularly in the mining sector, will positively impact various sectors, notably exports and consumption, thereby enhancing overall economic growth beyond current estimates. The Central Reserve Bank of Peru projects GDP growth rates of 3.1 percent for 2024 and 3 percent for 2025, reflecting a consistent economic recovery trend.
Internal demand and investment
The Multiannual Macroeconomic Framework for 2025-2028 emphasizes that economic growth will be bolstered by increased internal demand driven by heightened investment and improved private consumption. This growth is anticipated to occur within a context of low inflation and favorable financing conditions, creating a conducive environment for national and foreign investment. The government’s commitment to economic reactivation aims to stabilize the macroeconomic landscape by reducing fiscal deficits and public debt while promoting public-private partnerships.
Sectoral opportunities
In 2025, specific high-growth sectors characterized by technological innovation and the ability to address critical global challenges present promising investment opportunities. Identifying these sectors requires carefully analyzing market trends and economic indicators, including GDP growth, inflation, and interest rates, which are crucial in shaping investor sentiment and market dynamics. The government’s reforms aimed at improving infrastructure investment and reducing bureaucratic hurdles further enhance the attractiveness of these sectors.
Risks and challenges
Despite the optimistic outlook, several risks could hinder economic growth. External uncertainties, such as geopolitical tensions and commodity price volatility, pose significant economic challenges. Additionally, domestic factors, including political instability and social unrest, could impede progress toward the planned medium-term fiscal consolidation and affect overall economic activity. Furthermore, potential natural disasters and public health concerns, such as new COVID-19 outbreaks, remain critical in shaping the economic landscape.
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