Peru will enter the intermediate phase of the economic cycle this year, with a dynamic first half expected and non-primary economic growth nearing 4%, according to Banco de Credito del Peru's (BCP) Monthly Macro and Markets Special Report.
Likewise, the banking institution stated that the last part of the current year would be less dynamic as the period leading up to the April 2026 elections approaches.
"While not all economic cycles are the same, and not all sectors move in unison, it is important to consider the different phases of the cycle and their characteristics," BCP Economic Studies Department Manager Carlos Prieto stated.
He noted that the economy moved into the early phase of the economic cycle in 2024 and rebounded post-recession as the supply shocks of 2023 dissipated.
"Now, this year (2025), the economy would enter the intermediate phase. Typically, this stage of the cycle is the longest, with the economy consolidating its dynamism, even though some sectors may see more moderate growth rates compared to the early phase, which was measured against negative rates in 2023," Prieto explained.
"In this intermediate phase, inventories and sales reach a relative balance, corporate profits are favorable, (and) credit growth tends to accelerate; additionally, monetary and fiscal policy shifts to a neutral stance," he added.
Regarding inflation, the report stated that it is still expected to end 2025 at around 2.5%.
However, a slowdown to nearly 1% y/y in the coming months is not ruled out, given the high monthly figures (above the median) recorded in February and March 2024.
Meanwhile, annual inflation excluding food and energy (January 2025: 2.4%) would remain around current levels in a context of no demand pressures amid a currently negative output gap.
Finally,
the BCP Economic Studies Department projected that the Central Reserve Bank (BCR) will continue cutting rates throughout the year, with the rate expected to close 2025 between 4.25% and 4.50%.
This occurs in a context of controlled inflation and anticipation of the Fed's moves.
"It is more likely that a new cut will take place in March or April, in a context where both overall annual inflation and core inflation would continue to slow down, and the exchange rate might face downward pressure due to a favorable regularization of corporate income tax," he pointed out.