Peru: Selected Issues

IMF Staff Country Reports, May 21, 2024

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Peru: Selected Issues

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Bibliographic details

• Published: May 21, 2024
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400276729.002

Executive summary

• The Selected Issues paper focuses on productivity and growth in Peru.
• Firms have maintained smaller sizes to avoid the application of a profit-sharing legislation, which has resulted in lower productivity.
• After a decade of high economic growth averaging over 6 percent per year, potential growth has been falling since 2014.
• A much slower pace of investment and human capital accumulation, but most notably a decline in total factor productivity growth, has driven the decline in potential growth.
• Firm-level productivity has worsened, and the decline has been broad-based across the economy.
• Special corporate tax regimes and labor legislations and regulations have created barriers to productivity growth.

Key findings and drivers

• Firms choose smaller sizes to avoid profit-sharing legislation, leading to lower productivity.
• Potential growth declined after showing a decade-long average growth rate of over 6 percent per year.
• The decline in potential growth is driven by:
  • A much slower pace of investment.
  • A much slower pace of human capital accumulation.
  • A decline in total factor productivity growth.
• The productivity decline is broad-based across sectors at the firm level.
• Special corporate tax regimes and labor legislations and regulations act as barriers to productivity growth.

Policy implications and recommendations

• Reform regulations that impose excessive costs to formalizing or growing a business to raise productivity.
• Introduce greater labor market flexibility to:
  • Ensure workers can transition to productive sectors of the economy.
  • Reduce labor informality.

Publication metadata (from source)

• Publication title: Peru: Selected Issues
• Publication date: May 21, 2024
• Series: Country Report No. 2024/134
• Pages: 42
• Volume: 2024
• Issue: 134
• DOI: https://doi.org/10.5089/9798400276729.002
• ISBN: 9798400276729
• ISSN: 1934-7685
• Subjects/Keywords: Artificial intelligence; Climate change; Environment; International organization; Monetary policy; Natural disasters; Potential output; Production; Productivity; Technology; Artificial intelligence; B. artificial intelligence; B. Measuring productivity; building RESILIENCE; Caribbean; Climate change; El Niño shock; Global; labor force complementarity; Natural disasters; Potential output; Productivity; total factor productivity growth

Source: Peru: Selected Issues, IMF Staff Country Reports, May 21, 2024.

Content in this bundle

• Peru: Selected Issues; IMF Country Report No. 24/134; May 2, 2024
  • Peru: Selected Issues; IMF Country Report No. 24/134; May 2, 2024 (Markdown version)
  • Peru: Selected Issues; IMF Country Report No. 24/134; May 2, 2024 (PDF)