Updated 4 weeks ago

Peru to become Latin America’s top economy with 3.5% GDP in 2017

Peruvian GDP will continue to post one of the highest growth rates in the region at 3.5% in 2017, Central Reserve Bank (BCR) Governor Julio Velarde has projected.

“We are still among Latin America’s top growing countries and, according to our forecast, we will likely be the most [economically] dynamic next year,” he pointed out.

BCR expects the Inca nation to record the second highest growth in the region (3.5%) in 2017, only behind Bolivia (3.9%), but outperforming Paraguay (3.5%), Argentina (3.0%) and Colombia (2.4%).

Likewise, it is expected to surpass Chile (1.8%), Uruguay (1.5%), Mexico (1.4%), Ecuador (0.6%), Brazil (0.5%) and Venezuela (-3.8%).

Natural disaster impact

During the presentation of BCR’s March 2017 Inflation Report, Velarde explained the slight downward revision of Peruvian GDP to 3.5% owes to the impact of Coastal El Niño weather phenomenon.

As is known, said pattern has led to abnormal precipitations, thunderstorms, landslides and floods in the Andean nation, leaving thousands of victims and the loss of US$ millions worth of infrastructure.

This notwithstanding, the BCR head expects Peru to regain the lead of economic growth in 2018 by bouncing back to 4.1%, thus exceeding GDPs of Bolivia (3.9%), Paraguay (3.6%) and Colombia (3.1%).

Likewise, it is expected to surpass Argentina (3.1%), Chile (2.6%), Brazil (2.4%), Uruguay (2.2%), Mexico (2.1%), Ecuador (0.9%) and Venezuela (-0.1%).

Inflation

On the other hand, Velarde projected inflation will drop to 2.4% in 2017, thus sliding back into its target range.

“We expect inflation to stand at 2.4% this year, and to remain one of the lowest in the region,” he stressed.

Peru would thus experience the second lowest inflation rate in Latin America, higher only than that of Ecuador (1.9%) and lower than Chile (3%), Bolivia (4%), Paraguay (4.2%), Colombia (4.3%), Brazil (4.3%), Mexico (5.4%), among others.