Peru has a history of strong economic growth, but that trend has slowed in recent years due to the COVID-19 pandemic, political instability, and social conflict. GDP growth in 2022 was 2.7 percent, below the pre-pandemic trend and well below the 4-5 percent growth rates of the past decade. The Central Reserve Bank of Peru (BCRP) forecasts GDP growth of 2.2 percent in 2023, with continued social conflicts and adverse climatic conditions weighing on the economy.
The GOP’s deficit stabilized to 1.6 percent of GDP in 2022, and government debt levels are expected to improve. Inflation spiked to 8.5 percent in 2022, but the BCRP forecasts it will settle at 3.0 percent in 2023.
The U.S.-Peru Trade Promotion Agreement (PTPA) helped drive more than $22 billion in annual two-way trade, up from $9.1 billion in 2009, the year the PTPA entered into force. Under the PTPA, U.S. consumer and industrial goods exports to Peru are no longer subject to tariffs. The agreement also eliminated tariffs on almost 90 percent of U.S. agricultural product exports, with the remaining tariffs to be phased out by 2026. Most imports (93 percent of codes) are subject to an 18% value-added tax (VAT), as are domestically produced goods. There are no quantitative import restrictions.
The PTPA also established a secure and predictable legal framework for U.S. investors operating in Peru, including intellectual property protections. Overall, Peru has an open investment environment with strong protections for contract and property rights. Private sector investment accounted for approximately 80 percent of Peru’s total investment in 2022. Peru’s investment promotion agency, ProInversion, encourages foreign investment in almost all areas of the economy, particularly to support infrastructure development. Several companies from the region, as well as from the People’s Republic of China (PRC), North America, and Europe have started actively buying local companies in key sectors such as energy generation and distribution, power transmission, fishmeal, and retail. Prospective investors would benefit from consulting local legal counsel to navigate Peru’s complex bureaucracy.
Political Environment: for background information on the political and economic environment of the country, please click on the link to the U.S. Department of State Countries & Areas website.