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 it living in urban areas -10 million living in Lima alone- and almost 9 million are younger than 15 years.
The Peruvian economy grew from a GDP of US$ 58 billion 20 years ago to around US$ 211.4 billion in 2017. GDP per capita (current US$) has also increased dramatically since 1997 and has almost reached US$ 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 performance is expected to continue in the years to come, with a forecasted annual real growth rate of over 4% in the upcoming years.
Favorable international commodity prices, the negotiation and signing of numerous free trade agreements, and a business environment that promotes private investment have contributed tremendously 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 our 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. 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 in 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, a 13.3% higher than imports during the same period in 2017.
The responsible macroeconomic policies implemented are reflected in a low and stable inflation rate of 1.4% for 2017, due to a rapid reversal of the rapid correction of the supply shocks faced by the agricultural sector, El Niño Costero, as well as to the context of a weak economic cycle. Inflation is expected to fall below 2% during the first half of 2018, and then gradually converge towards 2%. In 2017, Peru’s external debt of 36% of GDP was included private and public sector external debt of 16.7% and 15.3% of GDP, respectively. According to Central Bank estimates, both public and private external debt are expected to maintain a decreasing trend in the upcoming years.
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