Peru's Economic Growth Amid Political Turmoil

Peru's economy demonstrated significant resilience in 2025, with a Gross Domestic Product (GDP) growth of 3.44%, marking the best performance since the pandemic. This growth was primarily driven by a robust construction sector, which surged by 6.7% for the year and 12% in December alone, alongside expansions in commerce and manufacturing. The country also reported the lowest inflation rate in Latin America at 1.51%, reflecting a stable macroeconomic environment despite ongoing political instability. The statistics agency's report indicated that the economy has now expanded for 24 consecutive months, although the mining sector experienced a contraction of 2.18% in December, negatively impacting overall growth.

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The economic achievements come at a precarious political moment for President José Jerí, who assumed office in October 2025 after the impeachment of Dina Boluarte. Jerí faces a censure vote in Congress, driven by allegations of influence peddling linked to meetings with Chinese businessman Zhihua Yang. This political instability raises concerns about the sustainability of Peru's economic growth, as Jerí would be the eighth president to face such challenges since 2018. The upcoming elections scheduled for April 12, 2026, add further uncertainty to the political landscape.

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Peru's inflation rate of 1.51% in 2025 is notable not only for its low figure but also for extending a streak of nearly 29 consecutive years of single-digit inflation, the longest in Latin America since the 1950s. This achievement is attributed to a disciplined fiscal policy and an independent central bank that has maintained a reference rate of 4.25%. The Bank of Central Reserve of Peru (BCRP) projects inflation to remain stable at around 2% for 2026 and 2027, indicating a commitment to maintaining economic stability in a region plagued by inflationary crises.

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Despite the positive economic indicators, critics point to the paradox of Peru's situation: a strong macroeconomic framework exists alongside significant political chaos. The ongoing censure vote against Jerí and the history of rapid presidential turnover raise questions about the long-term viability of these economic gains. More than 78 lawmakers have signed the motion for censure, reflecting deep political divisions that could undermine economic progress.

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Looking ahead, the BCRP and financial institutions like Fitch and Goldman Sachs project continued growth for Peru, estimating a GDP increase of around 3% for 2026. However, the political landscape remains a critical factor that could influence these forecasts. The interplay between economic performance and political stability will be crucial as Peru navigates its upcoming elections and potential leadership changes.

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• “The paradox is Peru’s defining feature: an autonomous central bank, disciplined fiscal policy, and the region’s lowest inflation coexist with institutional chaos that would cripple most economies.” — Analyst, unnamed

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• “For investors navigating a continent where price stability remains the exception, Peru offers something increasingly scarce — a macro environment boring enough to be reliable.” — Finance Minister Denisse Miralles

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In summary, while Peru's economic indicators are promising, the looming political challenges present a complex scenario that could impact future growth and stability.

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