An End of the Year with Heterogeneous Performance
Economic activity in the last few months of 2025 displays a heterogeneous picture, with a sectoral configuration advancing at different rhythms and with determining elements to approach the performance of the Peruvian economy in 2026, a year marked by national-level elections. According to the latest Current Economic Activity Progress Report by the National Institute of Statistics and Informatics (INEI), three sectors are expected to move by the end of 2025: electricity, manufacturing, and construction, linked to the dynamics of domestic demand and private investment recovery. These sectors are part of a larger framework of industrial sectors in Peru with varying levels of dynamism.
Sectors That Move the Economy in the Final Months of 2025
Electricity: A Confirmation of Productive Recovery
The electricity subsector registers an increase of 3.31% in October compared to October 2024. This subsector is highly correlated with productive activity; therefore, the registered increase points to a higher use of installed capacity in industry, commerce, and services, a key signal given the weight of the industrial sectors in Peru in sustaining national output.
Manufacturing: A Moderate Recovery Sustained after Volatile Months
The manufacturing sector registers a growth of 1.73% in September, corroborating a moderate recovery. This behavior results from two components: primary manufacturing, related to fishing and natural resource processing, and non-primary manufacturing, related to consumer goods and intermediate goods manufacturing. As one of the most relevant of the industrial sectors in Peru, this sector is key to economic diversification and job generation.
Construction: The Most Dynamic Sector
Construction has been the most dynamic sector, driven by rising domestic cement consumption. In October, this indicator rose by 9.1%, following a healthy 11.15% increase in September. This pattern points to an increase in the execution of private works, real estate projects, and self-construction activities. In the same way, capital goods and construction materials imports rose by 12.8% in October, pointing to the continuity of investment in expansion and machinery renewal in the industrial sectors in Peru that are based on infrastructure development.
Sectors That Mark the Deceleration at the End of 2025
Hydrocarbons: A Continuation of the Downward Trend
The hydrocarbons sector registered a decrease of 6.59% in October due to the contraction in the volumes of oil and natural gas. This reflects, once again, the operational and investment challenges that have been affecting the sector for years.
Agriculture: Moderate Growth but with Structural Gaps
The agricultural sector grew 4.21% in October, with mixed results between crop and livestock. Although positive, its growth is more modest compared to other sectors of the economy, due to productivity gaps, limited access to technology, and greater vulnerability to climate.
Public Investment: A Relevant Source of Deceleration
Central government spending on public investment registered a year-on-year fall of 6.59% in October. This is the fourth consecutive month of year-on-year variation in the negative. This also directly affects infrastructure works, equipment purchases, and multi-year investment in transport, sanitation, education, health, among other areas.
The Outlook for 2026: A Year of Elections and Economic Consequences
Electoral Cycles and Public Investment Execution
There is a recurrent pattern during electoral cycles: a slowdown in public investment execution during pre-electoral years. For example, in 2016, year-on-year execution fell to 70.4%, one of the lowest levels in a decade. In 2021, the performance was slightly better, but still below the level of 2022. This occurs, among other factors, by stricter control, by changes in technical teams, and by greater administrative caution.
The Counterpart of Weaker Public Sector: Private Investment
In this environment, where lower public sector execution is expected, the behavior of private investment will be central. Its performance, however, will be determined by factors such as political stability, macroeconomic conditions, and business expectations throughout the electoral process.
Business Expectations: Optimism with a Grain of Caution
According to the Monthly Macroeconomic Expectations Survey by the Central Reserve Bank of Peru (BCRP), the business environment in Peru is in optimistic territory. In November, 16 out of 18 indicators crossed the threshold of 50 points. Expectations for the economy 12 months ahead closed at 63.9 points, and the variable expectations for the firm’s situation at 12 months closed at 70 points. Both of these signal constructive sentiment in the medium term. However, the indicators related to investment and hiring at 12 months turned slightly lower, signaling greater caution in the context of the 2026 elections.
What to Watch in 2026: Variables to Follow
For 2026, several factors and indicators will be determining the performance of the Peruvian economy, both in the short term and in the medium term, among them are:
- Construction: the key is that it continues at high levels and multiplies.
- Fiscal revenues and, indirectly, the external sector: due to the normalization of metal prices, a substantial contribution is still expected, but with more moderate growth.
- Public investment: It is to be expected that its pace will significantly decelerate in the pre-electoral months.
- The reaction of the private sector to political uncertainty and electoral information.
- Macroeconomic conditions: an adequate macroeconomic environment is key to generating positive signals for private investment. In this sense, the Peruvian economy heads into the year with low inflation, a stable exchange rate, and strong private consumption.
Conclusion
As 2026 begins, the performance of industrial sectors in Peru and the dynamics of demand, investment, and public spending will determine its capacity to continue with the stable growth of recent months. The continuity of construction, manufacturing, and electricity activity will be key for the second half of the year, in which the impact of the election results may start to be reflected, as well as the behavior of other productive sectors. In the short term, key variables to follow will be related to construction and its multiplier effects, the evolution of metal prices and their effect on exports and fiscal revenues, the magnitude of the pre-electoral public investment deceleration, and the reaction of the private sector to political uncertainty. In the context of the 2026 elections, uncertainty about economic performance is relevant, but with better macroeconomic conditions, domestic factors, and signals from political actors, Peruvian society and the business sector will be able to look at the year with more confidence.