Economy of Peru will grow 10% in 2021: BBVA Research

According to the research service Group BBVA, the economy of Peru will grow by 10% in 2021. The Peru Economic Outlook. First Quarter 2021 published by the BBVA states: “ The Peruvian economy will grow around 10% in 2021, largely due to a “rebound effect”, but also supported by the favourable external environment and despite both regulatory and electoral uncertainty. In 2022, when the local vaccination process has been broadly deployed, an expansion of 4.5% is expected.” 

The BBVA states: “Our forecasts include heightened uncertainty associated with both regulatory issues and the electoral process, in particular in the first half of the year, affecting private sector spending decisions. In spite of this, the favourable international context and the natural rebound of the Peruvian economy after its steep decline in 2020 (-11,5%), which we estimate will contribute with around eight percentage points to this year’s growth rate, lead us to expect a 10% GDP expansion in 2021. 

On the fiscal side, we estimate that the deficit will recede, ending 2021 somewhat below 5% of GDP (8,9% in 2020). As a result, the gross public debt will temporarily remain at a level equivalent to 35% of GDP. Stabilising it below 40% will require the next government administration to implement measures in order to increase tax collection. 

The Central Bank has room to keep stimulating the economy through its monetary tools. In this context, we expect the policy rate to remain at 0,25% until mid-2022.” 

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