The International Monetary Fund (IMF) on Wednesday kept its Peru growth projections for 2017 and 2018 unchanged at 2.7% and 3.75%, respectively, the multilateral institution revealed in its latest economic report on the Inca country.
In a press release, IMF highlights Peru's average 5.25+% growth since 2000, which has allowed the country to significantly reduce unemployment and poverty.
IMF also underlines inflation is in low single digits, the fiscal position has strengthened, and dollarization has declined markedly.
Regarding the context of the commodity boom, IMF's Executive Board stresses the essential role played by sound macroeconomic management and structural reforms.
However, it acknowledges the current difficult juncture given domestic headwinds and challenging external conditions.
In this respect, IMF warns that the Odebrecht corruption scandal —which broke in December 2016— is weighing on investment and confidence.
"And one of the worst flooding and landslides in over 50 years [related to Coastal El Niño] has affected a significant part of the population, caused widespread infrastructure damage, and raised domestic food prices," the statement continues.
High GDP in the region
The IMF noted that, although commodity prices have recovered somewhat since late 2016, they remain significantly lower than during the commodity boom.
"While slowing in the short term given sizable domestic shocks and a smaller contribution from new export projects, growth
is expected to remain high relative to the region."
IMF goes on to project GDP growth
will "slow to about 2.7 percent in 2017 [supported by a significant fiscal stimulus] before bouncing back to over 3¾ percent in 2018."
This, the release says, "as reconstruction spending filters through the economy and projects delayed due to the Odebrecht scandal start to catch-up."
Lastly, the Fund expects inflation to gradually return to the Central Reserve Bank's (BCR) 1%-3% target range as weather-related factors abate and food price inflation declines.