4 Reasons to Invest in Peru
1.- Internationally Acknowledged Macroeconomic Soundness
Peru is one of the fastest growing economies in the world, having multiplied its GDP 3.7 times in the last 20 years, increasing from US$ 58 billion in 1997 to US $214 billion in 2017.
Private investment and rising exports have played a key role in this spectacular growth, creating synergies all over the country and in multiple sectors. Total exports increased from US$ 6.8 billion in 1997 to US$ 44.2 billion 20 years later. Mining exports were US$ 26.8 billion in 2017, distributed across different metals like copper, gold, zinc, lead, silver, molybdenum, etc. Additional major export sectors include agricultural, oil, fishing, textile, chemical, manufacturing, and others.
This high growth happened while the responsible macroeconomic policies implemented are reflected in a low and stable inflation rate of just 1.4% in 2017 and a total external debt of 36% of GDP, from 51% in 1997. The external public debt is just 25% of GDP. And the Net International Reserves (NIR) from the country are around US$ 60 billion, more than all the imports of any year.
So, Peru’s outstanding performance is expected to continue in the years to come, with a forecasted annual growth rate of 4-5%.
2.- Friendly Investment Environment
Peru offers a favorable modern legal framework for foreign investment, meaning that foreign investors receive the same treatment as local investors (non-discriminatory treatment) and they have the freedom to purchase stocks from locals, to access internal and external credit and to pay royalties. They also enjoy free transfer of capital and free competition, while having a guarantee for private property as well as having access to most economic sectors, excluding production of arms, investments within 50 kilometers of its borders and a principal local partner is required for investments in maritime cabotage as well as in air transport.
Peru participates in a network of investment agreements and is a member of ICSID and MIGA, as well as involved in the Investment Committee of the Organization for Economic Co-operation and Development (OECD), which promotes the implementation of the Guidelines for Multinational Enterprises.
The result of all of these efforts that encourage and support a promotional framework for any responsible private investment is that Peru is ranked as the 58thcountry in easiness to do business (World Bank Ranking), one of the top positions for a Latin American country.
3.- Open Trade and Market Access Policy
Peru has been very active in negotiating free trade agreements with all its trade partners and the important global markets which represents more than half of the world population. The key countries or markets with which Peru has special trade agreements include United States, European Union, China, Japan, South Korea, Brazil, Argentina, Colombia and most of South America, Canada and Mexico, other European countries, Australia, and others.
For investors, this is critical because most capital goods or machinery does not need to pay tariffs to enter Peru and while producing in Peru, they gain preferential access to all the countries with whom Peru already has preferential access.
4.- Attractive Sectors to Invest
There are many attractive investment opportunities in Peru. Every export sector could benefit from foreign, expert and sustainable investors. Mining offers huge potential growth since only a small portion of the land has been explored and yet Peru is currently a leading mining country. One reason for this is that the Andes mountains makes metals easy to reach. Food and manufacturing are also in the rise. Oil and natural gas processing and distribution will be expanding for decades to come in Peru.
Tourism is also booming and many new services will be needed as more parts of the country open to visitors. The real estate development in all major cities of Peru will provide opportunities for many developers. All the public services will be enhanced and commerce will develop at a quick rate.
Not only will Peruvian exports be attractive to investors, but the domestic markets are multiplying in terms of consumers with higher income. It’s important to note that GDP per capita in Peru grew from less than US$ 5,000 in 1997 to US$ 13,000 last year, increasing almost 160% (when converted to international dollars or PPP). This positive performance is instrumental in Peru’s winning the fight against poverty. Since 2004, poverty rates dropped from 55% to 20.7% for the whole population. A growing middle class is developing in Peru and will need the same services that developed countries offer their citizens.