Peru economic growth projected at 2.9% amid El Niño risks

BBVA Research has lowered its economic growth projections for Peru, estimating a GDP expansion of 2.9% for both 2026 and 2027. This revision follows previous, more optimistic estimates of 3.1% for the current year and 3.5% for 2027.

A primary driver for this downward adjustment is the El Niño phenomenon, which is expected to negatively impact economic activity, particularly in the agriculture and fishing sectors. While construction, commerce, and services show dynamism due to internal demand and private investment, the climate anomaly poses a significant threat. Growth could slow to between 1% and 2% in the first half of 2027 before recovering in the latter half of the year.

Inflation remains a critical risk. Projections suggest inflation could reach approximately 5% by 2026 and continue to rise in early 2027. Factors contributing to this include international oil prices, which have already impacted fuel and transport costs, and increased private spending.

Economist Hugo Perea identified several other risks to the economy, categorized into internal and external factors. Internal risks include the impact of El Niño, government response efficiency, and rising crime rates. External risks include geopolitical tensions, such as potential escalations between Iran and the United States, and global supply shocks.