KEY ISSUES Context: The overall state of the economy remains strong despite lower metal prices and market turbulence in mid-2013. The economy is still operating somewhat near potential and continues to be one of the most dynamic in the region. However, the pace of growth slowed in 2013 as a result of external shocks and lower domestic confidence. Headline inflation increased due to a combination of supply shocks and exchange rate "pass-through" effects. The current account deficit has widened recently due to a fall in exports. Against this background, fiscal policy provided a positive impulse, while the Central Reserve Bank of Peru (BCRP) eased monetary policy to support activity and allowed greater exchange rate flexibility to protect the economy from external shocks. Perspective: The outlook is positive with balanced risks. On the upside, a faster implementation of structural reforms and elimination of investment bottlenecks can greatly increase growth potential.
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International Monetary Fund (2010) studied this question.