The economy of Peru is stable and full of investment opportunities. Its favorable legal framework, abundant natural resources, and ambitious project portfolio point to a promising future for the country. Over recent decades, Peru has emerged as one of the most stable economies in the region, noted for its economic growth, low inflation, and fiscal balance. After Paraguay and Uruguay, the country is projected to be the third fastest-growing economy in the region, with a predicted growth rate of 3% for 2024. Unlike its regional peers, the economy of Peru is expected to sustain similar growth in 2025, making it an attractive destination for foreign investment.
Economic Stability and Growth
The macroeconomic stability of the economy of Peru is reflected in a low inflation rate of 2.6%, the second lowest in the region after Ecuador. This inflation control boosts purchasing power and promotes private consumption, thus supporting economic growth. Another critical factor is Peru’s low public debt, which stands at 33.2% of GDP in 2024, significantly lower than its Pacific Alliance neighbors: Chile (41%), Mexico (50%), and Colombia (58%). This prudent management of public debt positions Peru as a regional leader in this area, enhancing investor confidence.
International Reserves and Credit Rating
Peru’s Net International Reserves (NIR) amount to USD 80.365 billion as of September 2024, surpassing its regional counterparts. By measuring international reserves in months of imports, Peru’s economy leads with 17.5 months, followed by Brazil with 16.6 months and Uruguay with 15.5 months, while other countries like Colombia and Venezuela have 11.7 and 8.1 months, respectively. This high level of reserves helps maintain exchange rate stability, which, in turn, reduces volatility against external shocks.
Additionally, in September 2024, the annualized fiscal deficit held steady at 4.0%, consistent with levels seen since May, primarily due to increased non-financial expenses by the general government. Despite this, the rolling fiscal deficit is expected to decrease to around 3.0% by year-end. Among countries with a BBB credit rating according to Fitch Ratings, such as the Philippines, Hungary, and Italy, Peru shows a higher fiscal deficit than the average. However, in terms of public debt as a percentage of GDP, the economy of Peru remains well below the average for similarly rated countries, highlighting its prudent public debt management and allowing the country to maintain a strong position despite fiscal challenges.
Thanks to this economic strength, Peru has retained one of the highest credit ratings in the region. Moody’s has reaffirmed Peru’s sovereign rating at “Baa1” with a “stable” outlook. Likewise, Standard & Poor’s maintained its BBB+ rating, and Fitch Ratings rated it as BBB. These ratings reflect Peru’s ability to meet its financial commitments, supported by prudent economic management that has kept the economy of Peru in a prominent position within international markets.
2024 Investment Project Portfolio
Peru’s economy has solidified itself as an attractive destination for foreign investment due to its macroeconomic stability, abundance of natural resources, and favorable legal framework. Mining remains a crucial sector, drawing numerous international investors interested in tapping into Peru’s natural wealth. Beyond mining, Peru’s economy has diversified into sectors like Agriculture, Manufacturing, and Services.
Peru’s legal framework for foreign investment is noteworthy. It guarantees equal treatment for domestic and foreign investors. Additionally, the country has signed multiple free trade agreements with economies worldwide, facilitating access to international markets and offering tariff advantages.
According to the 2024 Investment Project Portfolio published by the Lima Chamber of Commerce, 1,652 megaprojects with a total investment of USD 194.396 billion have been identified. This study includes projects equal to or greater than USD 10 million in pending investment in the Mining, Hydrocarbons, Electricity, and Transport sectors.
Mining
The mining sector in Peru is one of the most dynamic, with 70 projects totaling USD 55.5 billion. Of these, 53 are in the construction phase, including 31 copper projects, five gold projects, eight zinc projects, two iron projects, five silver projects, one polymetallic project, and one phosphate project. The remaining 17 projects are in the exploration stage. Investments are concentrated in Cajamarca and Apurímac, with USD 16.4 billion and USD 12 billion, respectively. These projects are operated by private entities under concessions, demonstrating how the economy of Peru continues to offer robust opportunities in mining.
Transportation
The transportation infrastructure includes 430 megaprojects with a pending investment of USD 61.85 billion, encompassing 234 roadways, 31 bridges, 60 paths, 70 highways, 14 airports, 15 ports, and five railways. These investments are managed across projects operated by private entities, Public-Private Partnerships (PPPs), and public works. Roadway investments amount to USD 34.782 billion, with airports receiving USD 3.726 billion. A riverway project costing USD 111 million further reflects a comprehensive approach to improving connectivity and transportation across the economy of Peru.
Hydrocarbons
The hydrocarbons sector features 25 projects valued at USD 10.49 billion, including 14 upstream projects (exploration and production), nine downstream projects (refining and marketing), and two midstream projects (transportation and storage). Most projects are operated by private companies under licenses, particularly in Cusco, Piura, and Loreto, collectively holding USD 5.413 billion. Additionally, two projects will be awarded by ProInversión, with another constructed as a public work, indicating a mix of private and public investment to drive the sector.
Various Sectors
This category includes 1,027 megaprojects in sanitation, health, education, ICT, and retail, with a total investment of USD 51.983 billion. In education, 260 projects are planned at USD 5.15 billion, while health includes 172 projects valued at USD 10.276 billion. Most of these are public works, though private investments and PPPs exist. Much of this investment is concentrated along the coast, particularly in Lima, Ica, and La Libertad, aiming to improve infrastructure and services across key regions in Peru’s economy.
Electricity
The electricity sector includes 100 projects valued at USD 14.572 billion, distributed among 46 hydroelectric plants, 13 interconnections, 15 transmission lines, nine solar plants, one wind farm, and 16 distribution projects. Private entities operate most projects under concessions. Significant investments are located in Arequipa, Cusco, and Huánuco. Furthermore, ProInversión will award four projects, and 13 will be constructed as public works.
Conclusion
In conclusion, Peru’s economic stability, robust legal framework, and extensive portfolio of investment projects make it an increasingly attractive destination for foreign investors. The country’s low inflation, prudent public debt management, and high international reserves offer a resilient foundation that boosts investor confidence and shields against external volatility. With major opportunities spanning mining, transportation, hydrocarbons, electricity, and public infrastructure, Peru leverages its natural resources and promotes diversification across various sectors. This diverse investment landscape, bolstered by favorable trade agreements and equal treatment for foreign investors, underscores Peru’s commitment to sustained economic growth and development. As Peru continues to advance its ambitious infrastructure and sectoral projects, the country stands poised to attract significant capital and foster long-term economic prosperity.