Peru Growth Pops in July, Topping Forecasts as Construction and Retail Surge

July rebound and the numbers

Peru's economic activity index, a proxy for GDP, climbed 1.70% in July from the prior month, according to the national statistics agency INEI. Compared with a year earlier, activity rose 3.56%, topping the 2.2% median forecast from nine economists polled by Bloomberg and coming in stronger than any individual estimate.

Sector winners and losers

The monthly bounce was powered by domestic demand pockets: construction surged 9.85% year over year and retail expanded 6.79%. Mining eked out a 0.24% annual gain. Warmer-than-usual conditions hit ocean and farm output, with fishing down 27.44%, while agriculture and manufacturing slipped 1.23% and 1.81%, respectively.

Inflation heat and the policy backdrop

The economy had shrunk on a month-over-month basis in May and June, leaving second-quarter year-over-year growth at its slowest since early 2024. Despite Peru's copper-heavy, relatively steady economy - where growth has outpaced many neighbors and, in recent years, inflation has been among the lowest in emerging markets - prices have run hotter lately. Inflation has exceeded the central bank's 3% ceiling for six months in a row, and in August it came in at 4.44% - the fastest rate in nearly three years. Policymakers kept the benchmark at 4.25% for the 12th consecutive meeting earlier this month, indicating they see the jump in prices as transitory.

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Outlook, politics and what it means for your money

Looking ahead, both the central bank and the government project growth of 3.4% in 2026, with a pickup in private investment expected to help buffer the economy against a likely strong El Niño. Politically, President Keiko Fujimori has asked Congress for decree powers lasting four months to address key security and economic issues. Her administration, which took office in late July, sent the request to Congress to fast-track efforts to fight crime, formalize more jobs and prepare for El Niño. Lawmakers still must approve it, and while her party holds the largest bloc, it does not have a majority.

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