Research Update: Peru Long-Term Foreign Currency Rating Lowered To 'BBB-' On Political Uncertainty Constraining Growth; Outlook Stable

We expect a moderate economic recovery for Peru in 2024-2025 following the contraction in real GDP last year stemming from various shocks to growth. However, a fragmented Congress and limited political capital of the administration weigh on private-sector investment sentiment and pose an opportunity cost to growth, which constrains Peru's capacity to rebuild fiscal space. We lowered our long-term foreign currency sovereign credit rating on Peru to 'BBB-' from 'BBB'. The stable outlook incorporates our expectation of moderate growth and fiscal deficits that keep net general government debt inching higher, though we expect it to remain below 30% of GDP over the next three years. On April 25, 2024, S&P Global Ratings lowered its long-term foreign currency sovereign credit rating

...- We expect a moderate economic recovery for Peru in 2024-2025 following the contraction in real GDP last year stemming from various shocks to growth. - However, a fragmented Congress and limited political capital of the administration weigh on private-sector investment sentiment and pose an opportunity cost to growth, which constrains Peru's capacity to rebuild fiscal space. - We lowered our long-term foreign currency sovereign credit rating on Peru to '###-' from '###'. - The stable outlook incorporates our expectation of moderate growth and fiscal deficits that keep net general government debt inching higher, though we expect it to remain below 30% of GDP over the next three years....

Research Update