Author/Editor:

International Monetary Fund. Western Hemisphere Dept.

Publication Date:

June 28, 2017

Electronic Access:

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Summary:

With average growth of over 5¼ percent since 2000, Peru has significantly reduced unemployment and poverty. Inflation is in low single digits, the fiscal position has strengthened, and dollarization has declined markedly. In the context of a commodity boom, sound macroeconomic management and structural reforms have played an essential role in this improvement. With lower commodity prices now, consolidating these gains and further reforms—including financial deepening and labor reforms—will be critical in helping Peru reach its target of high-income status. The government has introduced several structural reforms aimed at modernizing the economy, increasing formality, and lifting potential growth. But the current juncture is a difficult one given domestic headwinds and challenging external conditions. These include the Odebrecht scandal, one of the worst flooding and landslides in over 50 years, the lack of a majority in Congress, and significant uncertainty surrounding the U.S. outlook and how much protectionist pressures will rise globally.