Moody's changes Peru's outlook to stable, affirms Baa1 ratings

By Ovunc Kutlu

ISTANBUL (AA) - Moody's said that it changed Peru's outlook to stable, from negative, and affirmed its Baa1 ratings.

The rating agency said the outlook change reflects that the adoption of political reforms alleviates medium-term concerns about the country's institutional stability that could have durably weighed on governability.

"A more stable political environment will help restore a more constructive balance of power between executive and legislative branches of government and help the economy overcome a severe confidence shock," it said in a statement on Friday.

The affirmation of Peru's ratings reflects that its creditworthiness remains anchored by its high fiscal strength, its ample buffers to cope with shocks, and its strong policymaking capabilities to ensure macroeconomic stability despite governance challenges, the statement added.

Peru's real GDP grew 2.5% in the first half of this year, the rating agency noted.

After a 1.4% annual recovery in the first quarter, economic activity accelerated 3.6% in the second quarter, it said.

"We expect that in the second half of the year and throughout 2025, the economy will continue to consolidate its growth, supported by domestic demand and exports that are benefiting from strong external demand and favorable prices," the statement said.

The agency expects real GDP growth to reach 2.7% in 2024, but added that upside risks could push growth closer to the government's 3.2% projection.