International Monetary Fund. Western Hemisphere Dept.
INTERNATIONAL MONETARY FUND
With average growth of over 51/4 percent since 2000, Peru has significantly reduced unemployment and poverty. Inflation is in low single digits, the fiscal position has strengthened, and dollarization has declined markedly. In the context of a commodity boom, sound macroeconomic management and structural reforms have played an essential role in this improvement. With lower commodity prices now, consolidating these gains and further reforms-including financial deepening and labor reforms-will be critical in helping Peru reach its target of high-income status. The government has introduced several structural reforms aimed at modernizing the economy, increasing formality, and lifting potential growth. But the current juncture is a difficult one given domestic headwinds and challenging external conditions. These include the Odebrecht scandal, one of the worst flooding and landslides in over 50 years, the lack of a majority in Congress, and significant uncertainty surrounding the U.S. outlook and how much protectionist pressures will rise globally.