Peru's growth forecasts appear overly optimistic

Significance

The finance minister's hope that growth this year could reach 4% seems highly optimistic. The Central Bank has successfully reduced inflation to its target range, allowing interest rates to be lowered.

Impacts

• The Peruvian economy is likely to remain susceptible to external shocks, making accurate prediction difficult.
• Pressure to raise taxation on formal businesses is likely to rise.
• The fiscal deficit is set to widen between now and the elections.