Banco de Crédito del Peru (BCP) maintains its growth projection for Peruvian economy at around 3% for 2024, BCP Economic Studies Department Manager Carlos Prieto reported on Monday.
The BCP officer said the factors that explain the economic rebound are:
(i) Absence of supply shocks in 2023 (El Niño Phenomenon, protests, among others).
(ii) Favorable export prices.
(iii) Lower inflation that benefits households' purchasing power.
(iv) Counter-cyclical economic policies (lower reference rate and higher public investment by the Government).
Forecast for 2025
Regarding gross domestic product (GDP) for 2025, the BCP projected a 2.8% growth.
"The cyclical recovery will extend into next year due to favorable external winds resulting from lower external rates and the positive effect of terms of trade at historic peaks, the materialization of the effects of a less restrictive monetary policy, and more dynamic consumer credit as default metrics in the financial system improve," Prieto explained.
Despite these factors, a slowdown will be observed in 2025 due to:
(i) 2024 benefits from statistical effects in response to shocks in 2023.
(ii) In 2024, the seventh withdrawal from Pension Fund Administrators (AFPs) took place.
(iii) The fiscal stimulus begins to be phased out as the fiscal consolidation process begins.
In this regard, it is important to highlight that the first half of 2025 is expected to be more dynamic than the second half of that year as the general election environment, scheduled for April 2026, approaches.
The BCP economist added that possible upward forecasts arise from:
(i) Faster acceleration of private investment if there is a successful unblocking of projects.
(ii) Key commodity prices accelerate again due to strong fundamentals.
(iii) New unidentified projects in the Chancay Port influence area.
Inflation
Regarding annual inflation, the Quarterly Macroeconomic and Markets Report indicates that it will accelerate in the coming months due to low or negative monthly records in September, October, and November last year.
"Despite this, inflation is still expected to close 2024 at around 2.5%," Prieto said.
Reference rate
It was also estimated that the reference rate will stand at 5% at the end of 2024.
"Our view considers that the real policy rate remains high in a context of a negative output gap and inflation indicators within the target range, with the expectation that the FED will soon begin to cut its rate, limiting the pressures for the rate differential (BCR-FED) to temporarily exceed 25 basis points," Prieto indicated.
Regarding exchange rate, he explained that the BCP maintains its projection at S/3.75 soles per US$1 for the end of 2024.