Peru: Booming Economy with Great Social Benefits
Peru, the third largest country in South America, after Brazil and Argentina, has a population of 32 million people, 80% of whom are living in urban areas, with 10 million living in the capital city of Lima alone, and almost 9 million people younger than 15 years of age.
The Peruvian economy grew from a GDP of US$ 58 billion 20 years ago to US$ 211 billion in 2017. GDP per capita (current US$) has also increased dramatically since 1997 and has reached almost US$ 6.6 thousand in 2017. When converted to international dollars (PPP), its GDP per capita grew from less than US$ 5 thousand in 1997 to US$ 13.4 thousand last year, increasing almost 170%. This positive performance is instrumental in Peru’s fight against poverty. Since 2004, poverty rates dropped from 55% to 20.7%. This outstanding progression is expected to continue in the years to come, with a forecasted GDP annual real growth rate of over 4% in the near term.
Favorable international commodity prices, the negotiation and signing of numerous free trade agreements and a business environment that promotes private investment, have greatly contributed to this growth. In the mining sector alone, export revenues increased from US$ 2.7 billion to about US$ 26.8 billion in the last 20 years. In addition, a successful export diversification policy has also contributed to the increase in Peru’s non-traditional exports, especially in theagricultural, fishing, manufacturing and textile sectors. Non-traditional exports reached US$ 11.4 billion in 2017, a notable increase from the US$ 2 billion in 1997. The overall exports from Peru totaled US$ 44.2 billion in 2017. In the first months of 2018 (January-May), exports reached US$ 19.8 billion, 17.8% higher than the amount exported in the same period during 2017.
Imports have also grown tremendously in the past 20 years. In 1997, Peru had a trade deficit of about US$ 1.7 billion, with total imports of USD$ 8.5 billion. By 2017, total imports reached US$ 38.5 billion and a surplus of US$ 5.5 billion. Between January and May of 2018, imports equaled US$ 17.15 million, 13.3% higher than imports during the same period in 2017.
The responsible macroeconomic policies that have been implemented in Peru are reflected in a low and stable inflation rate of 1.4% for 2017. In 2017, Peru’s public external debt was just 15.3% of GDP, down from 33% in 1997. The successful economic and financial story of Peru in recent years is due in part to the impact of the creation of the private pension system, which increased private savings, reaching a total fund of US$ 48 billion at the end of 2017.
Peru is a dynamic tourism and investment destination, having been named the best gastronomic destination in the world for 6 consecutive years.
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