Peru's economy has shown stronger-than-expected momentum in the early months of this year, leading many economic analysts to raise the forecasts they had made at the beginning of 2026.
Last April, the World Bank (WB) raised its 2026 growth forecast for Peru's economy to 2.7% in its Latin America and the Caribbean Economic Review (April 2026), compared with the 2.5% it had projected previously.
This month, BBVA Research revised upward its year-end growth forecast for the economy, raising it from the 2.9% projected in March to 3.1%, citing the strong performance recorded in the first quarter of the current year.
Along the same lines, the Central Reserve Bank (BCR) raised its 2026 growth forecast for Peru's economy from 3.2% to 3.4%, based on an improved outlook for the non-primary sectors and stronger growth in private spending.
According to its June Inflation Report, the monetary authority's upward revision was driven mainly by stronger-than-expected performance in activities linked to the domestic market.
In this regard, Peruvian Institute of Economics (IPE) Senior Economist Paola Herrera said the institute will update its 2026 economic growth forecast.
"Compared with the 2.9% forecast we had for 2026, we are considering revising our GDP growth forecast upward, taking into account arguments similar to those recently presented by the Central Reserve Bank," she stated.
For example, the expert highlighted that private investment was more dynamic than expected in the first quarter of 2026.
Herrera said this trend appears to have continued in April and even in May, which could also lead the institute to raise its growth forecast for this year, with private investment expected to post double-digit growth rates in the coming quarters.
She added that the electoral process conclusion would reduce uncertainty among businesses as well.
Improved outlook
Although its new forecast for this year has not yet been finalized, Herrera said the institute is working on a scenario in which the economy could grow by around 3.1% to 3.2% in 2026.
"However, we are still assessing the magnitude of the impact that an El Niño event could have on the country's productive apparatus," she remarked.
While this could boost private investment momentum and likely private consumption, she believes the presence of this climate phenomenon would weigh on exports, particularly the fishing and agricultural sectors.
Therefore, despite that potential impact, there are reasons to improve the outlook for Peru's economy, as the momentum in private investment is generating favorable results.
For this reason, she believes private investment will be one of the main drivers of Peru's economic growth this year.
"While mining investment stands out, other sectors, such as real estate, are also attractive. Overall, conditions have become somewhat more favorable for the vast majority of sectors," she noted.
Factors supporting growth
Meanwhile, Universidad del Pacifico Public Management School professor Juan Carlos Odar believes several factors are contributing to a more favorable outlook for Peru's economy.
"What has led to the upward revision of the forecasts is that the first months of the year delivered better-than-expected results, particularly March, when the economy continued to grow despite several shocks. In April, the data also remained positive despite the electoral process," Odar indicated.
The specialist believes developments in recent months show that the economy has considerable resilience, adding that its growth is being driven by an expansion in private investment.
"All of this has led to a more favorable outlook for the coming months," he pointed out.
The professor indicated that the Central Reserve Bank (BCR) took these factors into account when it raised its growth forecast for the current year.
However, Odar said he has a more moderate outlook for the second half of the year.
In that regard, Odar agrees with the BCR's revised forecast that Peru's economy will grow 3.4% by the end of this year.
"There could be an upward revision, but it would be slight. Marginally, there could be better results," he remarked.
The economist noted that, on the other hand, weather conditions could moderate expectations for overall economic growth this year.
Why could the economic outlook improve despite expectations of a moderate to strong El Niño event?
In this regard, Odar points to the strong results recorded in the first months of this year, which exceeded initial expectations.
In addition, he said an El Niño event is expected to spur further expansion in the construction sector, which would help boost the economy for two reasons.
First, there would be preventive works aimed at mitigating the adverse effects of the climate phenomenon.
Second, reconstruction efforts would follow once the El Niño event has passed.
"Therefore, the combination of these two factors would provide room for additional growth beyond what is currently projected," he stated.
Besides private investment and construction, Odar believes the services and trade sectors will also stand out as key drivers of growth, supported by the continued momentum of domestic demand.
Resilience capacity
The economy grew 3.5% through April due to the momentum shown by non-primary Gross Domestic Product (GDP), said Hugo Perea, chief economist at BBVA Research in Peru.
"Construction, trade, and services have been particularly dynamic," Perea noted.
According to the specialist, "the economy has shown remarkable resilience, continuing to grow despite geopolitical tensions abroad and the uncertainty that elections sometimes generate."
"It has delivered a relatively strong performance in an environment supported by favorable external conditions, particularly the high prices of the products we export," he added.
In its economic projections, BBVA estimates that an El Niño event will shave 0.6 percentage points off economic growth.
"We are already seeing the first impacts on activities such as fishing and some export-oriented agricultural products. We estimate that El Niño will reduce this year's Gross Domestic Product (GDP) growth by 0.6 percentage points," Perea explained.
However, he said other positive factors would offset that negative impact.
"For example, Gross Domestic Product (GDP) grew more than expected in the first quarter of the year, and all indications are that it will continue to grow faster than expected in the second quarter," the expert indicated.
"The economy continues to surprise on the upside," he concluded.