Peru: CA surplus rises to USD 2.2bn in Q4 2024, reaching 2.9% of GDP
Metodi Tzanov
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The current account surplus increased to USD 2.2bn in Q4 2024, equivalent to 2.9% of GDP, exceeding the USD 1.8bn surplus (2.6% of GDP) recorded in the same quarter a year earlier, the BCRP reported on Fri. The improvement was primarily driven by a stronger trade balance surplus, supported by favorable terms of trade and increased non-traditional exports. Therefore, this result led to a current account surplus of 2.2% of GDP in 2024, rising from a 0.7% surplus in 2023 and further strengthening the recovery from the 4.1% deficit in 2022.
The external goods trade balance posted a strong surplus of 8.9% of GDP in Q4, totaling USD 6.9bn, surpassing the 7.6% surplus in Q4 2023. This result was mainly driven by higher export prices of traditional products, particularly in mining, and an increase in the volume of non-traditional products shipped, the central bank reported.
The service deficit totaled 3.0% of GDP in Q4, amounting to USD 2.3bn, slightly above the 2.9% deficit in Q4 2023. The increase was mainly driven by higher payments for maritime freight due to rising transportation costs, followed to a lesser extent by increased spending on overseas travel.
The primary income deficit reached 5.3% of GDP in Q4, totaling USD 4.1bn, with that rising from a 4.5% deficit in Q4 2023. This increase was mainly driven by higher profits from foreign-owned companies in line with improved performance in some economic sectors, particularly services, mining, and industry. Secondary income totaled USD 1.8bn in Q4 2024, USD 25mn higher than the one recorded in Q4 2023, driven by higher remittance inflows.
The financial account recorded a net capital outflow of USD 1.2bn in Q4 2024, equivalent to 1.6% of GDP, partly due to a reduction in short-term liabilities in the banking and non-financial sectors. The financial account still posted a net capital inflow of USD 1.6bn for the full year 2024, equivalent to 0.6% of GDP, mainly explained by external financing received by the public sector, amounting to USD 5.2bn.
Overall, official data show that the current account has strengthened over the past year, reaching a 2.2% GDP surplus, which was the highest level since 2006, exactly matching the BCRP's forecast for the year. This was mainly driven by higher terms of trade and increased export volumes, which helped drive the trade surplus of goods, as well as by the expansion of remittance inflows, supported by improvements in the labor market abroad, and the recovery of inbound tourism. Looking ahead, the current account surplus should narrow this year due to higher earnings by foreign companies, in line with the recovery of economic activity in 2024, though strong export prices should still help sustain momentum going forward.