Peruvian growth will again disappoint this year

Subject

Outlook for Peruvian growth.

Significance

With both external and domestic demand ebbing in the first few months of 2019, forecasters are reducing their estimates for GDP growth in 2019. Peru is exposed to a slowdown in growth in China, since it is by far its biggest export market and the main source of foreign investment. Public investment also appears to be slower than in previous years.

Impacts

• Slower growth will impact negatively on employment and risk pushing up poverty levels.
• Business groups will increase their pressure on government to roll back social legislation on matters like labour stability.
• The relatively high level of reserves will cushion Peru from balance of payments pressures.