Peru’s Private Investment Surges 8.8% in Q1 2025 as Business Confidence Fuels Economic Momentum
Peru’s Central Reserve Bank (BCRP) reported an 8.8% year-on-year rise in private investment for Q1 2025, driven by falling
Peru’s Central Reserve Bank (BCRP) reported an 8.8% year-on-year rise in private investment for Q1 2025, driven by falling interest rates, robust mining activity, and recovering household spending.
This growth marks a sharp acceleration from 2024’s 3.3% increase, reflecting renewed optimism in one of South America’s fastest-growing economies. Gross domestic product expanded 3.9% during the same period, outpacing regional peers like Chile and Colombia.
Businesses ramped up capital expenditures as lending rates for large firms dropped to a three-year low, with the BCRP cutting its benchmark rate from 6.75% in late 2023 to 5.25% by March 2025.
Non-residential investment jumped 11.1%, supported by a 24.6% spike in machinery and technology imports. Mining projects, including expansions at Antamina and preparations for the $1.8 billion Tía María copper mine, drove much of this activity.
The construction sector grew 5.3%, fueled by infrastructure projects like the Lima Metro Line 2 and Chancay Port development. Residential investment reversed a 10-quarter slump, rising 2.8% as lower inflation and rising incomes spurred activity.
Inflation fell to 3.1% in April 2025, down from 8.5% in 2023, while real incomes rose by 4.2%, reviving self-construction. Over two-thirds of Peru’s housing market relies on the informal sector.
Unemployment fell to 5.6% in March, while formal job creation boosted consumer spending. Retail sales climbed 4.5% in Q1. Exports surged 14.2%, led by copper, natural gas, and agricultural goods like grapes, while imports of industrial equipment rose 15.5%.
The trade surplus hit $6.06 billion, though analysts warn global trade tensions and Peru’s 2026 elections could dampen momentum. Public investment grew 10.7%, focusing on education and transport, while private firms committed to $18.7 billion in upcoming projects.
Despite progress, challenges persist. Political uncertainty ahead of the 2026 presidential race and reliance on mineral exports—51.7% of total shipments—leave Peru vulnerable to commodity swings. The BCRP projects 3.1% GDP growth for 2025, contingent on sustained private-sector engagement and stable policies.
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