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PERU: Finance Minister Salardi Targets 4% GDP Growth, Aided By Tax Incentives

PERU
BulletPeruEM BulletEmerging Market News
  • Finance Minister Jose Salardi said yesterday that he will introduce tax cuts as he continues to target 4% GDP growth this year. This would be an improvement on 3.3% growth last year and would mark the fastest pace of growth since the pandemic rebound.
  • Salardi said that the tax incentives will target key sectors, including agriculture, forestry and fishing. He will also create a special economic zone near the new $1.3bn Chinese-owned Chancay port that is expected to increase trade significantly with China. Salardi said that the special economic zone would carry a 0% income tax from the onset.
  • On the fiscal front, the government is still targeting a 2.2% of GDP deficit this year, which would mark a notable improvement from a 3.6% deficit last year. Last year’s deficit was above the 2.8% fiscal ceiling, a miss that Salardi described as temporary.
  • In terms of the macro calendar, the next event of note is the BCRP monetary policy meeting on Thursday. The drop in CPI inflation to its lowest level since September 2018 keeps the door open to a 25bp rate cut next week, although the central bank is very near to the end of its easing cycle now and a further pause would be no surprise.
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  • Finance Minister Jose Salardi said yesterday that he will introduce tax cuts as he continues to target 4% GDP growth this year. This would be an improvement on 3.3% growth last year and would mark the fastest pace of growth since the pandemic rebound.
  • Salardi said that the tax incentives will target key sectors, including agriculture, forestry and fishing. He will also create a special economic zone near the new $1.3bn Chinese-owned Chancay port that is expected to increase trade significantly with China. Salardi said that the special economic zone would carry a 0% income tax from the onset.
  • On the fiscal front, the government is still targeting a 2.2% of GDP deficit this year, which would mark a notable improvement from a 3.6% deficit last year. Last year’s deficit was above the 2.8% fiscal ceiling, a miss that Salardi described as temporary.
  • In terms of the macro calendar, the next event of note is the BCRP monetary policy meeting on Thursday. The drop in CPI inflation to its lowest level since September 2018 keeps the door open to a 25bp rate cut next week, although the central bank is very near to the end of its easing cycle now and a further pause would be no surprise.