The Peruvian economy faces challenges after a setback of 20 years, according to the IPE.

Peruvian productivity has suffered a setback of 20 years, according to the Peruvian Institute of Economics (IPE), which indicates that current levels are lower than those recorded in 2004. Teodoro Crisólogo, senior economist at the IPE, has warned about this deterioration that affects the country's economic growth capacity. This alarming situation is reflected in the World Competitiveness Ranking, where Peru has dropped 8 positions and reached a historic low. During the conference 'Peruvian Economy: Growth Perspectives 2024-2025', the IPE revised upwards its economic growth projection for this year, from 2.4% to 3%. This is due to the growth of the Gross Domestic Product (GDP) in April, which reached 5.28%, as well as other variables such as private spending, increased public spending, and the replenishment of de-accumulated inventories in 2023. However, economic prospects for 2025 remain moderate, with a growth forecast of 2.8%. Crisólogo mentions that the International Monetary Fund's estimates for the next five years place Peru's growth around 2.4%, well below the projections that were made in 2014, which were at 5.8%. Political uncertainty also plays an important role in this scenario, as the year 2025 is considered "pre-electoral". This situation affects business confidence and the predictability of the economy, creating an unfavorable environment for long-term investment. Alexander Müller, chief economist at Bank of America, warns that the current political crisis could keep business confidence limited in the coming months. Despite the challenges, the precious metals sector presents itself as a favorable factor for the Peruvian economy, as high prices could boost investment in the country. However, Müller points out that the channels for these investments are limited, as there are no large-scale mining projects currently in progress. In the first quarter of the year, the national economy grew by 1.4%, although it lags behind neighboring countries such as Brazil, Chile, and Mexico. 132,000 jobs were recovered, mainly in sectors like commerce and consumer-related services. In April, growth was driven by domestic demand and consumption, as well as the recovery of sectors affected by climatic events in previous years. For the following months, sectors such as fishing and agriculture are expected to continue contributing to economic recovery, although at lower rates than those recorded in April. Private investment between April and May is estimated to have increased by 2.1%, according to IPE estimates, which are awaiting June data to confirm this trend and assess the sustainability of economic growth in the short term.