Without El Niño phenomenon and conflict in the Middle East, Peru's economy could have expanded by 4% in 2026, according to BCP's Quarterly Macroeconomic Report.
In this regard, the private bank has maintained its 3.2% growth forecast for Peru's economy this year, even though the agriculture and fishing sectors are expected to register a combined contraction larger than that seen in 2023, when El Niño phenomenon reached strong intensity.
BCP's Economic Studies Department explained that the slower dynamism of primary sectors will be offset by non-primary sectors, in a context in which domestic demand is expected to grow above 5% and private investment at a double-digit rate, both for the second consecutive year.
Even so, the ratio of private investment to GDP remains below its 2005 average, which, along with a large current account surplus, suggests there is room for the economy to grow at high rates, the report noted.
Demand factors
According to BCP, the main factors underpinning the positive performance of domestic demand include the favorable momentum associated with economic cycle maturation, external tailwinds stemming from export prices at historically high levels, faster credit origination in line with stronger aggregate demand, and economic expectations that remain in optimistic territory.
"Additionally, stronger momentum in mining and infrastructure investment could bolster growth over the forecast horizon, provided that the next administration makes progress in reducing regulatory barriers and accelerates project execution," BCP Economic Studies Manager Carlos Prieto stated.
Inflation could end 2026 at 4%
Regarding inflation, BCP's Quarterly Macroeconomic Report indicated that it could end 2026 at around 4%, amid a context of robust domestic demand.
However, the recent decline in oil prices suggests downside risks as long as the peace agreement remains in place.
Therefore, the financial institution estimates that the Central Reserve Bank (BCR) will assess a possible increase in its benchmark interest rate during the second half of this year.
This outlook is based on the potential contagion effect of inflation in transportation services on other components of the Consumer Price Index (CPI), which could push inflation expectations above the target range’s upper limit (1%-3%) and, consequently, prolong the accommodative monetary policy stance.
What about the U.S. dollar?
Finally, BCP refrains from providing an in-depth assessment of the exchange rate. It estimates that the U.S. dollar will end 2026 at around S/3.20.
(END) NDP/MVB