Peru: Macroeconomic Country Outlook
- According to GlobalData, the real GDP growth increased to 13.3% in 2021, following a 11.1% contraction in the previous year
- Peru was ranked 54th out of 152 nations in the GCRI Q2 2022
- GlobalData forecasts the services sector to grow by 6.8% in 2022
Peru is one of the largest producers of silver, gold, and copper and an important supplier of zinc and lead. Although the country produces both natural gas and petroleum, it is a net energy importer. The industrial sector growth averaged 4.8% during 2017–21. According to GlobalData, the sector is forecast to grow by 7.9% in 2022.
Key findings
- Tourism and Peru: In Q1 2022, there were 242,000 foreign visitors to Peru, up 689.3% from the same period last year. The top countries contributing to Peru's tourism sector were the US (32.6% of the country's total), Chile 10.3%), Colombia (7.6%), Spain (6.1%), Ecuador (5.8%), Argentina (4.6%), Brazil (3.6%), Mexico (3.3%), France (2.9%), Germany (2.7%), Canada (2.4%), and Italy (2.3% ). In Q1 2022, there were 5.3 million domestic arrivals which is up 96.1% from the same period in 2021. The National Chamber of Tourism predicts that more than 22 million tourists would visit the country's interior in 2022, that would be an increase of 50.7%, compared to the previous year. According to GlobalData, travel and tourism spending by international travelers increased by 147% in 2021, following a 77% contraction in 2020. GlobalData forecasts the spending by international travelers to rise by 47% in 2022.
- Strengths of Peru: A few of Peru's advantages are its deposits of copper, silver, gold, lead, zinc, natural gas, petroleum and urea. According to BP Stats, Statistical Review of World Energy (2022), Peru produced 128 thousand barrels of natural gas liquid per day in 2021. Oil refining capacity of Peru has increased to 276 thousand barrels daily from 253 thousand barrels daily in 2020. The country produced 11.5 billion cubic metres of natural gas in 2021. Peru is categorized worldwide as a mega-diverse country due to its regional climate variations as well as its natural and cultural resources. Peru is a part of the Pacific Alliance, a group that works to develop mechanisms for collaboration among its member nations (Chile, Colombia and Mexico) and to liberate trade in goods and services as well as the free movement of people and capital.
- World Bank’s 2020 Ease of Doing Business ranking: According to the World Bank, Ease of Doing Business Report (2020), Peru was ranked 76th out of 190 countries. It takes eight procedures to start a business in Peru as compared to an average of 8.1 procedures for the Latin American and Caribbean countries. Peru was ranked 37th in terms of getting credit and 55th in terms of registering property in 2020. It takes 19 procedures to get a construction permit in Peru as compared to an average of 15.5 procedures in the Latin American and Caribbean countries.
- Peruvian new agrarian law: The "Law of Agrarian Promotion" No. 27360 was repealed by Law 31087, which was enacted by the Peruvian Congress at the end of December 2020. The new law imposes higher minimum wage and requires employers to pay a bonus which is equivalent to 30% of the minimum wage. The Association of Agricultural Producers of Peru considered the repealed Law of Agrarian Promotion as the best social and economic programme that the nation successfully implemented and drew investors from many nations.
- Natural disasters: In February 2022, nearly 3,200 homes in Peru were impacted by natural or anthropic disasters with 179 of those being destroyed. This has been a decline as compared to the same month last year, when over 3.5 thousand homes were impacted. After a tanker run by the Spanish corporation Repsol leaked nearly 12,000 barrels of crude oil into the Pacific Ocean off the coast of Lima in January 2022, the Peruvian government declared an environmental emergency. According to Peru's environmental agency, oil spread over 39 square miles of sea, beaches, and reserves of protected nature. Spillover effects pose a threat to 180,000 birds, including many species that are already endangered.
- The economy is expected to slow down in 2022: The government has been able to control the spread of COVID-19 since June 2020, leading to a better fiscal position than many other countries. An effective vaccination program and prudent government spending lead to a quick rebound in economic activity. The Peruvian economy grew by 13.3% in 2021. According to GlobalData, the economy expanded 3.8% on an annual basis in Q1 2022, compared to 3.4% in Q4 2021 and 11.6% in Q3 2021. GlobalData forecasts the real GDP to grow by 2.6% in 2022, a slowdown from last year as the economy is facing multiple challenges of high price level, interest rate rise, and slowdown in economies of trading partners.
Key fundamentals
Sectoral outlook
- Tourism sector to recover with removal of travel restrictions: An "Emergency Plan for the Tourism Sector" was released by Peru's Ministry of Foreign Trade and Tourism after declaring an emergency until December 2022 for the tourism sector. It includes a number of initiatives meant to aid the tourism sector in recovering from a severe decline brought on by the COVID-19 epidemic. The plan suggests 60 regulations and activities that will boost investment, provide financial assistance, and advertise Peruvian tourism destinations. Rearranging loan repayments that the Peruvian government gave to travel agencies during the epidemic is one of the primary approaches and it aims to bring in 1 million foreign visitors, book 25 million domestic travel trips, and generate 900,000 employments in the tourism industry in 2022.
- Retail sector growth to slow down on lower domestic demand: According to GlobalData forecasts, the household consumption expenditure is forecast to grow at a slower pace of 3.1% in 2022, following a 10.4% growth in 2021, in the pursuit of rising inflation. Rising prices have shifted the consumer behavior towards meeting the needs of essential items, including food and fuel, replacing discretionary items like electronics, and apparels. Change is consumer behavior to impact the market dynamics and slow down activities in retail sectors due to reduced demand.
- Support for renewable energy sector in Peru: After the Peruvian government declared a climate emergency on the coastal hit areas due to oil spill in June 2022, the minister of energy and mining called for tenders for renewable energy, to be issued in 2022 to auction off about 2,000MW of capacity. The government anticipates that the open selection procedure would draw in investments of about $2 billion and assist in lowering energy prices for lower-income households. GlobalData expects Peru to reach a total renewable capacity of 3.91GW by 2030, of which onshore wind power will account for around 2GW. According to the most recent data on the electrical industry from the Peruvian Ministry of energy and mining, non-conventional renewable energy sources in Peru produced 273.7GWh of electricity in January 2022, same as in January 2021. Solar, wind, biomass, and biogas, which are considered non-conventional renewable in Peru, produced 5.5% of the country's electricity in January 2022.
GlobalData Country Risk Index (GCRI) – Q2 2022
Peru was ranked 54th out of 152 nations in the GCRI Q2 2022. The country’s score is in the low-risk score (30-40). Peru’s overall risk score is lower than Latin America (47.5) and the world average (44) in the GCRI Q2 2022. The country secured low risk on macroeconomic (29.3) and demographic and social structure indicator (40.4), compared to the World and Asia-Pacific region in Q2 2022. Peru’s overall score decreased from 41.2 in Q1 2022 to 38.7 in the Q2 2022 GCRI update.
GCRI Methodology
GlobalData’s unique Country Risk Model determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is designed to help firms formulate their global business strategies based on historical developments in an economy.
The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental, and legal data from a range of recognized national and international statistical sources, and also proprietary data from GlobalData. Latin American countries in this publication include Venezuela, Mexico, Ecuador, Peru, Colombia, Brazil, Argentina, and Chile.
About the report
GlobalData Macroeconomic Outlook report is designed to provide detailed macro-economic analysis which will help clients in their business planning, investment and strategic decisions, and analysis. It also provides a quick view of the current situation and the risk score of the country in comparison to region and world based on the proprietary risk framework. The report also highlights key strengths, weaknesses, opportunities, and threats in each of the pillars of PESTLE, economic growth prospects, and key events which can impact the country’s future outlook.
More details: Macroeconomic Outlook Report: Peru
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