Strong real GDP growth and the introduction of tax reforms have strengthened Peru’s public accounts. However, the country's relatively strong fiscal position is being challenged by ongoing declines in the price of copper, a key source of government revenue. Despite a deteriorating fiscal picture, Peru’s growing middle class will make consumer-related sectors, such as retail and food & drink, increasingly attractive for investors over the medium to long term.

We keep our clients informed of the latest market moves and political developments in Peru, as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 19 of Peru’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. Our aim is to keep you ahead of the curve, so you can feel confident doing business in Peru.

Peru Country Risk

BMI View:

Core Views:

  • The Peruvian economy will strengthen in the coming years, driven by production growth in the extractive sector, robust private consumption and infrastructure investment.

  • The incoming administration of President Pedro Pablo Kuczynski will boost infrastructure spending, bolstering the country's long-term growth.

  • The central government will post persistent, though narrowing, fiscal shortfalls due to lower government revenue growth.

Major Forecast Changes:

  • With exports outperforming our expectations and investor sentiment turning increasingly positive, we expect the Peruvian sol to trade higher in the coming quarters, although it will average lower on the year.

Key Risks:...

Peru Operational Risk Coverage (9)

Peru Operational Risk

BMI View:

BMI View: Peru offers one of the more attractive locations for investment in Latin America, due to its vast natural resource wealth, international trade connectivity and open policy towards foreign direct investment. The government treats both foreign and domestic investors equally under law and there are few restrictions on trade, capital flows or access to financing. However, the operating environment is undermined by an inefficient and corrupt judiciary, which hinders the effective enforcement of contracts and prevents the adequate protection of intellectual property rights. The country is therefore ranked in 22nd position regionally in the overall BMI Trade and Investment Risk Index, out of 42...

Peru Crime & Security

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BMI View: The most prominent threats faced by businesses operating in Peru are the high crime levels present, especially in urban areas. These are further perpetuated by high levels of organised criminal activity, related rival gang violence, and more risks stemming from financial and cybercrimes. Additional risks stem from the terrorist and drug trafficking activities of the group the Shining Path located in the VRAEM region of Peru, as well as a re-ignited territorial dispute with Chile. Therefore, Peru scores an uncompetitive 39.8 out of 100 for the Crime and Security Risk pillar of the BMI Operational Risk Index. This places the country in 27th place out of 42 Latin American states.


Peru Labour Market

BMI View:

BMI View: Peru's labour market offers a number of attractions for investors, notably stemming from its large and urbanised population, which boasts widespread vocational skills, and the low overheads incurred from employing local workers. These factors elevate Peru above all of its South American peers, with the exception of neighbouring Chile and Mexico, as an attractive location for labour-intensive industries, reflected in a regional ranking of eighth out of 42 Latin American states in the BMI Labour Market Risk Index, with a score of 56.8 out of 100. On a global scale, Peru performs less competitively in...

Peru Logistics

BMI View:

BMI View: Peru possesses a fairly well-developed maritime logistics network that greatly enhances its attractiveness as a regional hub. The most significant logistics advantage is the country's relaxed trade procedures environment, which offers competitive export costs. Other assets include low electricity and fuel prices and a well-established export infrastructure system. Risks lie in the poor state of the country's road and rail network, the underdevelopment of the country'...

Peru Trade & Investment

BMI View:

Peru has a weak legal system that offers little protection for businesses and suffers from extensive bureaucracy, hindering an investor's ability to open and close a business. However Peru's strong international ties provide good trade opportunities for investors and promote the country's trade and investment score. Overall, Peru is a regional underperformer for Trade and Investment Risk in BMI's Operational Risk Index, with a score of 45.9 out of 100, which places it 16 th out of 28 countries in Latin America and 94 th out of 170 states worldwide.

Peru's weak legal environment poses the most pronounced risk to investors, which is reflected in the country's low score of 46.6 out of 100 for this indicator in our Trade and Investment Risk Index. The country's law enforcement is considered to be highly corrupt, which has led to poor protection of intellectual property and a lack of confidence in the...

Peru Industry Coverage (18)

Peru Agribusiness

BMI View:

BMI View: We have revised our forecasts for several segments of the Peruvian agricultural sector in our Q1 2016 update though continue to maintain a positive outlook for the agricultural sector as a whole. Export crops such as coffee and cocoa are hampered by infrastructure constraints and a lack of investment; however, as Peru develops and gains recognition for organic and speciality crops, both these sectors stand to benefit. Peru is also set to benefit from cheaper food imports owing to the lower price of grains and weakness in the Argentine peso, as Argentina is a major source of imported grains.

Agribusiness Market Value
BMI Market Value By Commodity (2011-2019)

Peru Autos

BMI View:

BMI View: A strengthening economy and rising consumer spending inform BMI's positive view on Peru's new vehicle sales in 2016. We forecast a 2.3% increase, with commercial vehicles set to outperform.

Key Views
Source: BMI
  • New vehicle sales fell over 2015 against the backdrop of an economic slowdown caused by a fall in global demand for Peru's key mineral exports.

  • In this weak environment, heavy commercial vehicles (HCVs) have proved the underperformers. BMI expects this situation to reverse over 2016

Peru Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Peru Consumer Electronics

BMI View:

BMI View: We revised up both the data for 2015 and the medium-term outlook for Peru's consumer electronics market in the Q416 update. The upgrade to 2015 reflects the latest import data that show the decline in the PC and AV segments was slightly below our expectations, but the more significant change is the more bullish outlook for the nuevo sol against the USD over 2017-2019 that has direct upside for our device forecast. Peru is reliant on device imports, so appreciation has a positive impact on affordability, with upside for volumes in a market where device penetration and average selling prices are still relatively low. This informs our...

Peru Food & Drink

BMI View:

BMI View: We maintain a positive longer-term view of Peru's food and drink sector, which will see strong expansion rates and present a number of interesting investment opportunities over the forecast period. Peru's food and drink sector will attract more foreign investment over the coming years, on the back of market fragmentation and increasing household purchasing power. Peru will also look increasingly attractive as key regional markets, such as Brazil and Colombia, experience an economic slowdown.

Headline Industry Data (local currency)

  • Total food consumption growth year-on-year (y-o-y) in 2015: +9.3%; compound annual growth rate (CAGR) 2014-2019: +9.2%;

  • Per capita food consumption growth (y-o-y) in 2015: +7.8%; CAGR 2014-2019: +7.8%;

  • Soft drinks...

Peru Freight Transport

BMI View:

BMI View: Peru's freight sector will continue to have mixed growth rates in 2016, with a contraction in rail freight volumes of 2.48%, slowing growth in road freight at 1.05%, and the strongest growth in air freight at 2.75%. Rail freight has been affected by low exports of copper and generally subdued metals prices, while road freight growth will improve on 2015 estimates due to moderate growth in trade activity and construction sector growth. Rising private consumption leading to stronger demand for consumer electronics will benefit the air freight sector the most, hence the strongest growth forecast for this transport mode.

The economy in Peru is steadily improving and we forecast GDP growth at 3.8% for 2016, up from 2.2% estimated for 2015. August and September 2015 have however seen below expectations growth rates in GDP. The moderate growth is largely due to a slowdown in Peru...

Peru Information Technology

BMI View:

BMI View: We expect Peru's IT market to recover from the dip in performance in 2015 and move to a much stronger growth trajectory by 2017, as economic performance improves. Our Country Risk team expects strong economic growth, with further upside from substantial sol appreciation envisaged for 2017-18. This will enable a rebound in the hardware segment ,where PC penetration is still relatively low as households see purchasing power increase as well has having upside for average device prices. Adoption of software and services solutions is also relatively low in Peru, reflecting its frontier market status, though we expect this to change throughout the medium term...

Peru Infrastructure

BMI View:

BMI View: Peru has a significant infrastructure deficit spanning across the transport, energy and residential sectors which will ensure that demand for new projects remains high over the coming years, indicating potential investment opportunities for a broad range of construction contractors. Headwinds to growth for the construction sector include a lack of capacity from domestic firms, concerns surrounding the transparency and timely implementation of public tenders and lack of access to adequate financing, which all contributed to a construction value contraction in 2015. While we expect to see a small recovery in 2016, challenges to the infrastructure market remain significant, and, based on the current project pipeline, growth will remain subdued.

Latest Updates

  • Official construction industry values for 2015 have come in as forecast,...

Peru Medical Devices

BMI View:

BMI View: Although small, the market will grow by a 2014-2019 CAGR of 7.4% in US dollar terms, underpinned by government investment in the health infrastructure, including the establishment of new hospitals and the expansion of the telemedicine service. Lima will remain the most attractive area in the private sector, as the urban population has more disposable income to spend on medical devices.

Projected Medical Device Market 2014-2019
Total (USDmn) Per Capita (USD)

Peru Mining

BMI View:

BMI View: Peru's mining industry will ramp up in terms of value and production growth, despite low mineral prices during 2016-2019. Competitive operating costs and a stable business environment will support a strong project pipeline.

Peru Mining Industry Value Forecast (2013-2019)
2013 2014e 2015f

Peru Oil & Gas

BMI View:

BMI View: While the Peruvian government is trying to garner investor interest in the country's upstream potential, we believe that lack of below-ground prospectivity, a history of strong environmental opposition and a highly competitive regional market will be the key factors diminishing the attractiveness of the country's oil and gas industry over the coming years.

Headline Forecasts (Peru 2013-2019)
2013 2014...

Peru Petrochemicals

BMI View:

Above-ground risks to the development of the natural gas sector are impeding progress on the development of Peru's downstream petrochemicals potential, which is considerable given the massive size of the country's upstream resources. Completion of any world-scale petrochemicals complex is unlikely before 2020 as the country needs to secure significant infrastructural development before investment can be guaranteed. If Peru realises its ambitions in the petrochemicals sector, it could rival Brazil as a major supplier to the South American polymers market.

From an estimated production of 12.7bn cubic metres (bcm) in 2014, we forecast Peru's natural gas production to increase over the next decade owning to strong domestic demands. This relatively bullish forecast is based on our view that the sector will benefit from a strong reserves picture and recent investments into infrastructure.


Peru Pharmaceuticals & Healthcare

BMI View:

BMI View: The presidential result, although unexpected, will not dampen the attractiveness of Peru's pharmaceutical and healthcare sectors which are forecast to experience strong growth over the coming years. Despite frequent clashes during the presidential race, Kuczynski has adopted a conciliatory tone in victory, and he and Fujimori broadly share a conservative agenda which seeks to usher in a new era of foreign investment and business growth. This will ensure government commitment to healthcare will continue to improve domestic pharmaceutical consumption.

Headline Expenditure Projections

  • Pharmaceuticals: PEN4.98bn (USD1.56bn) in 2015 to PEN5.32bn (USD1.61bn) in 2016; +6.8% in local currency terms and +3.0% in US dollar terms. Forecast...

Peru Power

BMI View:

BMI View: Strong growth in electricity consumption, government tenders for power generation and transmissions projects, and a business-friendly new government support our positive outlook for the Peruvian power sector. Delays to the Southern Peruvian Pipeline confirm our view that delays in project tendering and implementation are the main risk in...

Peru Real Estate

BMI View:

BMI View: We expect to see a slower level of economic growth in Peru over the coming years than we previously anticipated; however growth is still set to accelerate and as a result, the real estate sector will benefit. Growth particularly in the retail and industrial sectors will be observed as infrastructure development projects will lend support to the generation of new secondary locations. Such developments will also see demand shift marginally from Lima, and rental rates in secondary locations may be set to rise with demand levels. The capital will maintain its dominance upon all three real estate sub-sectors in the short-term, but over the coming years we may witness an alleviation of pressure upon the city - something which is desperately needed should the market maintain liquidity.

Peru's economy grew at a rate of 2.8% in 2015, predominantly influenced by private consumption and...

Peru Retail

BMI View:

BMI View: Household spending is likely to receive another boost in the medium term, following the election of pro-market ex-banker Pedro Pablo Kuczynski as Peru's next president. The projected solid growth is likely to become less risky under Kuczynski's leadership, which will likely have a positive effect on Peru's economy and consumer incomes. As for the supply side, the ongoing nationwide construction of shopping centres - led by a few large retail conglomerates - is rapidly increasing the availability of modern real estate, which is becoming more coveted by both regional and international clothing, household goods and department store brands. Consequently, Peru's retail sector will continue enjoying sustained growth, underlined by 8.2% sol-denominated growth in household spending this year.

Headline Household Spending

Peru Telecommunications

BMI View:

BMI View : We maintain our positive outlook for the Peruvian telecommunications sector, particularly for the mobile market. The mobile market posted healthy growth but organic growth rates have tapered off in recent quarters, compared with the previous robust growth. Nevertheless, we believe that the market is poised for significant uptick, based on a multitude of factors. The prospects of increased competition and 4G LTE rollout suggest that operators will find unique ways to encourage technological uptake. The recent 4G auction in the 700MHz band saw the three main operators, Movistar, Claro and Entel spend more than USD911mn...

Peru Water

BMI View:

BMI View: This quarter we have substantially adjusted our water forecasts, drawing on new data and revising our future projections. Overall, we expect demand to drive investment into the water supply sector, and increased water metering to boost revenues and reduce non-payment risks to service providers. We maintain our positive outlook with regards to infrastructure developments, owing to the need for extensive sanitation developments and additional water supply requirements. However, we note that economic issues might constrain investment.

The water sector has improved dramatically over the past few years. This has largely been due to increased investment by the state and the main water companies, better connections reducing wastewater dumping, increasing revenues, better water...

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