Peru

Strong domestic demand, with El Niño probably hitting some sectors

The Peruvian economy should sustain its moderate rate of expansion through 2026 and 2027, with a slight slowdown in the latter due to strong El Niño. On the demand side, the impulse comes almost entirely from the private sector. Domestic demand grew 5.8% in 2025, its strongest since 2013, excluding the post-pandemic recovery, and could advance close to 6% in 2026. Household consumption, the main driver (2/3 of GDP), would grow 3.6%. Underpinning it is a labour market that has strung together two consecutive years of formal job creation, with some 250,000 posts concentrated on services, agriculture and commerce, translating into a 7.6% expansion of the formal wage bill. The fall in loan delinquency, the recovery in household credit after the 2023-2024 tightening, and the minimum wage increase from S/1,130 to S/1,300 (approximately US$333 and US$384) announced in July, should reinforce disposable income from the second half of 2026. Private investment is the most dynamic component as, after advancing 11.2% in 2025, it could rise over 12% in 2026, with its main mining component expanding by 11%, but decelerate to 6% in 2027, against a background in which business expectations remain largely optimistic. Public spending is moving in the opposite direction and accounts for a residual share of the impulse, with investment by general government all but stagnant, owing to weaker execution by the national government being only partly offset by subnational governments. Foreign direct investment remains concentrated in mining, energy and communications, and the handover of government, completed in July without institutional rupture, dispelled part of the uncertainty weighing on long-term decisions.

On the supply side, performance divides sharply. Non-primary activities, such as construction, commerce and services, should keep pace with the vigour of domestic demand. Construction benefits the most, thanks to residential building as well as road and mining works. The Ministry of Energy and Mines’ project pipeline comprises 66 initiatives amounting to USD 64.1 billion, of which a substantial share is already contracted. Tía María copper mine, in the Arequipa region, has already received USD 0.7 billion, is around one-third built and employs 4,500 workers. The first copper cathode is expected in the second half of 2027. At full operating capacity the mine should produce 120,000 tonnes a year and transfer approximately USD 400 million annually to the state in taxes and royalties, over a useful life of two decades. The same Mexican operator has announced some USD 10 billion earmarked over the next decade for the Los Chankas and Michiquillay projects and a new smelter in the south. Mining is growing modestly in volume terms, well below the rise in export value, which stems from prices rather than tonnage. The second phase of the port of Chancay (near Lima) is scheduled to begin in 2027, with an additional USD 2.5 billion that will lift total investment in the terminal above USD 4 billion and extend shipping capacity towards Asia. Tourism has settled at around four million visitors a year, an influx that is limited by air connectivity resources and by the concentration of arrivals in a single airport.

The primary sectors, by contrast, concentrate all the vulnerability in the outlook, and the determining factor is climatic. The Multisectoral Commission of the National Study of the El Niño Phenomenon (Enfen) maintains its coastal alert, does not rule out extraordinary magnitude at the close of 2026 and expects the event to extend into the southern hemisphere summer of 2027. The phenomenon operates through two opposing and simultaneous channels: intense rainfall and the activation of dry ravines along the northern coast, with a risk of flooding of cultivated areas, and a water deficit in the central and southern highlands and in part of the Amazon region. The National Convention of Peruvian Agriculture (Conveagro) estimates that between 20% and 30% of the farmland, some 2.2 million hectares, could suffer damage, and considers that the 2026-2027 campaign is already being compromised by high temperatures, which have affected the flowering of fruit crops such as mango and lime on the northern coast and threaten potato production in the highlands. This would be a complete reversal from last campaign when agricultural exports delivered a remarkable performance, exceeding USD 15 billion and reaching more than 150 markets. Moreover, the anchoveta catch in the north-central zone could fall by half. A recovery, expected sometime in 2027, rests on the assumption of a return to normal weather. Conversely, should the adverse alternative be confirmed, emergency spending will take the place of planned investment. Meanwhile, the effects are already materialising. Abnormally warm waters pushed the anchoveta away from the coast and disrupted the fishing season, dragging down with it the manufacturing tied to fishmeal. The climatic shock is also transmitted through the energy channel: with around three-fifths of electricity generation of hydraulic origin, periods of drought in the highlands force the system to substitute natural gas and diesel for water, which raises tariffs. Inflation has already exceeded the upper end of the target, which was already pressured by fuel prices after the closure of the Strait of Hormuz and the pass-through to transport and food costs. The central bank (BCRP) has postponed the return to target until next year and left its policy rate unchanged. Costlier freight and fertiliser hit the agricultural sector, just like the tariffs the US already applies to Peruvian exports, whose scope may widen with the ongoing investigation into copper. Peru arrives in 2027 more exposed to the climate-related risk than to the commodity cycle.

Record external surpluses and fiscal consolidation under strain

The external accounts are having their longest sequence of surpluses since the 2000s. With 2027, this would give Peru five consecutive years in surplus, a longer stretch than the commodity boom of 2004 to 2007. The explanation lies in the terms of trade, expected to rise 18.3% in 2026 on export prices 25.6% higher. Exports would total USD 118.2 billion, against USD 90.1 billion in 2025, and imports would come in near USD 69 billion, producing a trade surplus of USD 49.4 billion, equivalent to 12.3% of GDP. Copper and gold account for most of the gains. In 2027, figures are expected to be similar: export value will stop growing because the price effect will run out before the volume from the new mines shows up in the statistics. The gap between the trade surplus of 12.3% of GDP and a current account forecast at 3.9% shows where the money goes. The primary income deficit will widen as foreign-owned miners repatriate profits. Even so, the indicators of external strength have improved. Net international reserves passed USD 100 billion for the first time in 2026, i.e., about 28% of GDP and the largest coverage in the region. The sol is now the strongest currency in Latin America, to the point that the BCRP has gone back to buying dollars in the market to contain its appreciation, a move that helps explain the accumulation of reserves itself.

On the fiscal side the picture is less rosy. The deficit fell sharply in 2025, which allowed the country to comply with the fiscal rule after two years of breaching it, though the Fiscal Council noted that the public spending rules were not observed. The target for 2026 (-1.8%) is more demanding, yet the rolling twelve-month deficit to May was already running below it, helped by stronger current revenues and slower pace of capital spending by the national government. The BCRP projects it will be met with 1.5%, with current revenues growing 6.8% in real terms thanks to higher commodity prices and formal employment. This would still be above the legal ceiling of 1.4%, a deviation it attributes to rigid El Niño mitigation spending and the implementation of laws passed by Congress The market is more sceptical: several private-sector analysts estimate a figure close to 2%. Tía María coming on stream and other projects that will mature will broaden the tax base from 2027, but their effect on miners' income tax will materialise later, once the operators have recovered their investment. This is where the structural problem of public finances resides. In the five years to 2026, 287 laws with an adverse fiscal effect were enacted, against 108 in the previous five-year period, and the assessment of just 63 of them points to a permanent cost of S/36.7 billion a year, equating to close to 2.7% of GDP. Transfers to Petroperú, whose restructuring may require fresh injections, are costly. The cushion, for now, is the debt stock: projected at 28.2% of GDP in 2026, it is by far the lowest in the region.

The return of “Fujimorismo” after the troubled election

The current political cycle began with a removal from office. In October 2025, Congress ousted President Dina Boluarte, who had governed since the impeachment of Pedro Castillo in 2022. José Jerí, then president of the legislature, took over and was himself brought down a few months later amid influence-peddling investigations, leaving José María Balcázar, a Perú Libre congressman, to steer the transition. General elections were called for April 2026, the first under the restored bicameral system, with 60 senators and 130 members of parliament. Reaching the run-off were Keiko Fujimori, of Fuerza Popular (right to extreme right), with 17.1% of valid votes, and Roberto Sánchez, of Juntos por el Perú (leftist), with 12.0%. Fujimori won the vote with 50.14%, a difference of about 49,600 votes garnered among expatriates. Vote counting showed the highest share of invalid ballots in two decades. Fujimori took office in July 2026 on her fourth presidential attempt and 26 years after the end of her father's government. She is the first woman to be elected President and the ninth person to hold the post in ten years. Although still fragmented, the electoral threshold thinned the field considerably: of the 36 parties that contested the parliamentary elections, only six won seats, leaving some 17 million votes without representation. Fuerza Popular is the largest force in both houses of parliament, with 22 of the 60 senators and 41 of the 130 MPs, far from an absolute majority but enough to matter: impeaching a president requires a two-thirds majority, and the party holds a blocking minority in the Senate and stands within a few seats of one in the lower house. It shares the space with Juntos por el Perú, which has 14 senators and 32 MPs, Partido del Buen Gobierno (7 and 18, Renovación Popular (8 and 15), Obras (5 and 14) and Ahora Nación (4 and 10).

Looking at the economy, the market interpreted the appointment of Elmer Cuba, a former director of the central bank, to the Ministry of Economy and Finance, together with Julio Velarde serving a fifth five-year term at the BCRP, as a continued orthodox approach. Regarding the political landscape, Luis Galarreta, Secretary-General of Fuerza Popular and first Vice-President elect was appointed Chair of the Council of Ministers. The press reported that fifteen of the nineteen members of the cabinet face investigations or have prior criminal records, beginning with the Prime Minister. In her first days in office, Fujimori paired the minimum wage increase with a one-off compensatory bonus for micro and small businesses, created a national digital authority to simplify procedures, visited a military base in central Peru to reaffirm support for operations against drug trafficking. At the end of August, she requested Congress for delegated powers to legislate for 120 days on 66 separate matters across eight policy areas. Two axes of national emergency have been declared. The first is security: homicides rose from 7.7 per 100,000 in 2018 to 10.7 in 2025 and extortion complaints jumped from 3,200 to 26,500 over the same period, and three in four Peruvians name these issues as the government's priority, with irregular immigration ranking close behind after a decade of Venezuelan arrivals. Fujimori announced that the armed forces will temporarily take command of internal order operations in areas under a state of emergency, and she has backed a maximum-security prison, courts with anonymous judges, the deportation of undocumented migrants and withdrawal from the Inter-American Court of Human Rights, an agenda that depends on the delegated powers and has already met with resistance from civil society organisations. The second plank of action is El Niño prevention, which ties the political agenda to the fiscal constraint. Broadening revenue collection, another campaign promise, will require negotiating with the fragmented legislature in which the government has no majority of its own. The term of office lasts for five years but the government a short grace period: without visible results on security in the first months of office, the legitimacy of such a narrow victory will erode quickly.

China has been Peru’s leading trade partner since 2014. Bilateral trade reached USD 51.7 billion (or 33 billion exports from Peru) in 2025, which was five times the level recorded in 2010, when their free trade agreement entered into force. The breakout of their trade underscores the one-sided nature of the relationship: roughly 90% of exports to China consists of minerals, with China absorbing nearly half of Peru’s mining and fishing exports, while Peru imports equipment and consumer goods. The first half of 2026 confirmed this dependence. Total exports reached USD 54.0 billion, up 34% year-on-year, driven by the mining sector whose exports grew 49% on back of higher prices. China accounted for nearly two-fifths. The Port of Chancay, built by the Chinese state-owned company COSCO Shipping and operational since late 2024 serves this trade. The US occupies a distinct and complementary position. US imports from Peru totalled USD 5.0 billion in the first half of 2026, an increase of 19.5% year-on-year, and are concentrated in sectors that generate the highest levels of formal employment: one-third of Peru’s agricultural exports and half its textile and apparel exports are destined for the US market. The relationship, however, has become less predictable. US tariffs have already produced measurable effects, with shipments of copper wire rod and wire declining by more than 40%, a trend that has also been observed for fruit. Keen to attract investment, Lima strives to balance relations with these two partners: the critically important China, and the US, which is wary of the Chinese presence and drug trafficking. Peru adheres to the Shield of the Americas against cartels.

Payment

Electronic payment is prefered for both high-value and low-value transactions. Post-dated cheques are commonly issued in?Peru. Credit transfers are used for both high-value and low value payment transactions. The majority of low-value electronic credit transfers in Peru continue to be made between accounts in the same bank, known as intrabank or “on-us” transactions. Bills of exchange are a commonly used payment instrument for debt collections.

Debt Collection

The Peruvian judicial system is structured hierarchically. The Corte Suprema (Supreme Court) is the highest court, followed by courts that specialise in civil law, criminal law, constitutional law and labour law. These sit above the Corte Suprema in each judicial district, which deal with civil and commercial law cases. The Juzgados Especiales (specialised judges) are located in major cities in the country and deal with matters concerning, among others, civil and commercial law. Following this is the professional Juzgados de Paz (peace judges), located in major cities, and in charge of low economic value cases and other minor issues. Finally, Cortes de Paz (peace courts) are located in cities with lower populations, comprised of one judge who may or may not have the status of lawyer.

Amicable phase

The amicable phase in Peru is characterised by phone calls, written reminders, visits, and meetings, with the goal of settling the debt between two parties without triggering legal proceedings.

Legal proceedings

Conciliation Proceedings

Prior to judicial proceedings, Peruvian law requires of a conciliation process in order to reach a debt settlement agreement. The process constitutes two hearings, if an agreement cannot be reached, the proceeding ends, and both parties have to sign a conciliation act, which is then presented at the beginning of the judicial process.

Fast-track proceedings

The below text makes reference to the Unidad de Referencia Procesal (Unit of Procedural Reference), which is a reference value according to Peruvian law: each URP is 10% of the Unidad Impositiva Tributaria (UIT), which can be used in tax regulations to determine tax bases, deductions, limits of affectation and other aspects of taxes that the legislator deems appropriate. It may also be used to apply sanctions and to determine accounting obligations, The UIT is set at the beginning of the year by the Economic Ministry.

Two fast-track proceedings are available in Peruvian law:simplified proceedings (proceso sumarisimo) concern cases which the value is below URP 100. Juzgados de Paz have jurisdiction for amounts between URP 50 and 100. Defendants have five days to file a dispute after they received the notification from the judge. Within 10 days, the judge organises hearing for discovery, conciliation, evidence and judgment;shortened proceedings (proceso Abreviado) concern cases in which the value is between URP 100 and 1,000. Juzgados de Paz have jurisdiction for amounts between URP 100 and 500 and Juzgados Civiles have jurisdiction in cases for amount above URP 500. The defendant has 10 days to file a dispute from the admission of the petition by the judge. Discovery and conciliation will be examined during one hearing. If the conciliation was not successful, the judge mentions the disputed points and evidence to be provided or updated. Within 50 days of the conciliation hearing, the judge sets up an evidence hearing.

Executive proceedings

When creditors are owed an undisputed and certain debt, they can start executive proceedings. The debtor has five days from the notification to submit his defence. The judge will render a judgment, after which each party has up to three days to file an appeal.

Ordinary proceedings

Ordinary proceedings apply to cases with a value of over URP 1,000. The plaintiff sends a written petition to the court. The defendant can file a defence expressing the facts on which he intends to argue, within 30 days from the service of the writ. If the claim is complete (i.e.?includes all the relevant information), the judge sets up a hearing for conciliation. If the parties reach an agreement, it has the same effect as a judgment. If an agreement is not reached, the judge organises a hearing within 50 days of the conciliation hearing. The proceedings end when the judge delivers his or her decision. The length of proceedings depends mainly on the nature of the conflict, the number of parties involved, the complaints that occur, and the caseload of the judge in charge of the process. Based on these criteria, a first-instance judgment in a typical commercial litigation case may take approximately twelve to 18 months.

Enforcement of a Legal Decision

A domestic judgment becomes final and enforceable once all venues for appeal have been exhausted. The first instance judge is in charge of enforcing judgments, and will issue a writ of execution ordering the relevant party to comply with the judgment within five working days. If the order is not complied with during the five-day period, the judge must order the seizure of the debtor’s assets in order to sell them at auction. For foreign awards, creditors located in Peru must file a claim before the Superior Court located in the debtor’s place of domicile. The Court will consider whether the foreign judgment is compatible with Peruvian law and any international treaties between the two countries. If it is found to conform, the judge shall authorize the enforcement of the judgment in the Peruvian Jurisdiction.

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Insolvency Proceedings

The Instituto Nacional de Defensa de la Competencia y de la Proteccion de la Propriedad Intelectual (INDECOPI) is the specialized administrative agency that deals with insolvency proceedings.

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OUT-OF-COURT PROCEEDINGS: PREVENTIVE PROCEEDING

Preventive proceedings aim to provide a forum for debtors to reach a consensual restructuring agreement with their creditors. It is intended to be a fast track process that only debtors can initiate.

The PARC was created by Indecopi to prevent the insolvency and bankruptcy of those companies that, because of the health emergency caused by the coronavirus pandemic, lack liquidity to meet their obligations. This procedure is regulated in Legislative Decree No. 1511 and its Regulations.

With this bankruptcy procedure, Indecopi offers an alternative that seeks to reschedule the unpaid obligations of the rated entity, avoid its insolvency, the loss of business and sources of employment and, with this, contribute to the recovery of credit and continuity in the chain of payments in the national economy.

Joining the PARC is very simple, fast and safe, since the entire procedure is carried out virtually.

REORGANISATION

If creditors decide to allow their debtors to restructure, they will be asked to approve a reorganisation plan within 60 days from the decision to proceed with reorganization. Both the decision to reorganise and the organisation plan must be approved by more than 66.6% of the allowed creditor claims. During the process, creditors decide whether to allow the debtor’s management, to continue operating the business, or to replace the debtor’s management. Once the reorganisation plan is approved and all the pre-publication claims are paid according to their terms, then INDECOPI grants a decision declaring the formal conclusion of the reorganization proceeding.

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LIQUIDATION

If the creditors decide to liquidate, then a liquidator will be appointed at the Creditors’ Meeting from the list registered with INDECOPI or under La Ley General de Sociedades 26887. The will be asked to approve a liquidation plan for the debtor and decide whether the debtor should be authorized to continue its business during the liquidation. Whether voluntary or involuntary, the liquidator must follow a mandatory order in the payment claims. To conclude the liquidation process, the liquidator files a petition before the Public Registry in order to register the extinction of the company. However, if creditors remain unpaid, then the liquidator must file a petition before a civil judge to obtain a judicial bankruptcy declaration.

Last updated: August 2026