The Peruvian economy grows by 5.3% in April, but faces challenges in the future

The Peruvian economy has started the year with robust growth, according to the report presented by BBVA Research. In April, the Gross Domestic Product (GDP) increased by 5.3%, driven mainly by sectors such as fishing, agriculture, and manufacturing. BBVA Research's chief economist, Hugo Perea, highlights that these positive results are partly due to the dissipation of the climatic anomalies that affected the country in previous months. However, Perea also warns that there are factors that could slow down economic growth in the coming quarters. Climate normalization, uncertainty both domestically and externally, and possible populist measures are some of the concerns that could negatively impact the Peruvian economy. Regarding the fiscal deficit, BBVA Research projects that this year it will be around 2.5% of GDP, similar to the estimates of the Ministry of Economy and Finance. However, there is a bias towards this deficit being higher, which could represent a failure to meet the fiscal targets proposed by the Government. For the second quarter of the year, BBVA Research estimates an expansion of 4%, reflecting a positive outlook but with certain underlying risks. Additionally, economic growth is expected to continue in May, albeit at a slower pace than in April. The bank has revised upward its growth projection for this year, increasing it from 2.7% to 2.9%. Factors such as the price of exports and the normalization of climatic conditions have been taken into account in this revision. The rise in the price of copper and other commodities also plays a significant role in the economic growth projection. In the political sphere, it is noted that the weakness of the Executive Branch and the uncertainty generated by possible populist measures could affect the country's economic stability. Furthermore, the importance of key projects such as the seventh withdrawal of pension funds and various infrastructure initiatives that could boost consumption and GDP is emphasized. Regarding medium-term projections, BBVA Research lowered its growth estimate for the year 2025 from 2.9% to 2.7%. It is expected that in the following years, growth will remain around 2.7%, which could pose a challenge for poverty reduction in the country. In this sense, improving the political context and strengthening institutional frameworks are identified as key factors to accelerate Peruvian economic growth in the coming years. Faced with a panorama of uncertainty and challenges, it is essential to work on policies that promote sustainable development and long-term economic stability.