At the beginning of the XXI century, Peru managed to achieve notable successes in socio-economic development, especially in the mid-2000s – early 2010s, when the average annual growth rate of real GDP of the republic was about 5-6%.
However, since 2014, the country has demonstrated significantly lower rates of economic development, which is primarily due to the establishment of a less favorable market environment in the world market of minerals (including copper and gold), which are Peru's main exports. The COVID-19 pandemic subsequently had an extremely negative impact on the macroeconomic situation of the country.
In 2020, Peru recorded a 10.9% reduction in real GDP. The recession led to a significant deterioration in a number of indicators of socio-economic development and had a negative impact, first of all, on the level of well-being of the population. In 2021 Peru showed GDP growth of 13.4%, which, however, was replaced by a moderate value of 2.7% in 2022 due to the influence of the high base effect.
In general, despite the negative effect of the pandemic and the slowdown in growth after 2014, in the past 20 years, Peru has managed to increase the volume of the economy, significantly reduce poverty, increase income levels and reduce social and economic inequality. So, in 2001, the Gini coefficient was 0.513, and GNI per capita, calculated using the Atlas method, was 1.9 thousand US dollars.
As of 2022, the Gini coefficient in the country has decreased to 0.403, GNI per capita has increased to 6.8 thousand US dollars. In 2008, an increase in the value of the GNI indicator allowed Peru to move into the group of countries with above-average incomes, according to the World Bank classification. The share of citizens living below the poverty level established for states with the specified income level (less than $6.85 per day) decreased from 63.9% in 2001 to 32.2% in 2022.
In 2023, the country recorded a decrease in real GDP by 0.6% due to internal political instability, as well as adverse weather conditions caused by the onset of the Southern oscillation phase of the natural phenomenon El Nino (an abnormal increase in surface water temperature in the Pacific Ocean, leading to changes in weather conditions worldwide). The recession also caused a serious deterioration in the situation in the Peruvian labor market (the unemployment rate in 2023 increased to 4.8% compared with 3.9% a year earlier). According to World Bank estimates, the share of the country's citizens living on less than $6.85 per day in 2023 increased to 33.8%, while the Gini coefficient increased to 0.414. In addition, Peru also recorded an increase in the budget deficit and a decrease in government revenues.
As the political situation stabilizes, as well as the country's economy adapts to the climate typical of El Nino, real GDP growth in Peru is expected to reach 2.7% in 2024. It is predicted that an additional stimulus to development will be given by the process of easing the monetary policy pursued by the central bank of the country, which began against the background of a decrease in the inflation rate. In the medium term, the implementation of new mining projects will also have a positive effect on the national economy. Despite the challenges that Peru has faced in recent years, the country's economy as a whole is characterized by a high degree of sustainability, provided primarily by a competent economic policy of the Government. The significant development potential makes it possible to forecast further stable growth of Peru's real GDP in the foreseeable future at a level above 2% annually.
The latest local peak of inflation in Peru was observed in 2022, when, against the background of global price growth, the indicator reached 7.9%. The prevailing conditions required the central bank of the country to gradually tighten its monetary policy. The highest level of the key rate of 7.75% remained from January to September 2023, after which the regulator began its systematic reduction against the background of stabilization and subsequent decrease in inflation. Thus, by the end of 2023, inflation fell to 6.3%, and as of August 2024, the key rate in Peru was 5.5%. It is predicted that in 2024, inflation in the country will be 2.3% (this value corresponds to the target range of the central bank, set at 1-3%). In this regard, it is expected to continue easing the monetary policy pursued by the regulator and further lowering the key rate level.
