ECONOMY
Peru's economy has shown strong growth over the past five years, helped by market-oriented economic reforms and privatizations in the 1990s, and measures taken since 2001 to promote trade and attract investment. GDP grew 8.0% in 2006, 6.7% in 2005, 4.8% in 2004, 4.0 in 2003, and 4.9% in 2002. President Alan Garcia and his economic team have continued these policies. GDP is projected to grow by more than 7% in 2007. Recent economic expansion has been driven by construction, mining, export growth, investment, and domestic demand. Inflation is projected to remain under 2% in 2007, and the fiscal deficit is only 0.6% of GDP. In 2006 external debt decreased to $28.3 billion, and foreign reserves were a record $17.3 billion at the end of 2006.
Peru’s economy is well managed, and better tax collection and growth are increasing revenues, with expenditures keeping pace. Private investment is rising and becoming more broad-based. The government has had success with recent international bond issuances, resulting in ratings upgrades. The Garcia administration is studying decentralization initiatives, and is focused on bringing more small businesses into the formal economy.
Foreign
Trade and Balance of Payments
Peru and the U.S. signed the U.S.-Peru Trade Promotion Agreement (PTPA) in April 2006 in Washington, DC. The PTPA was ratified by the Peruvian Congress in June 2006 and by the U.S. Congress in December 2007. On December 14, 2007 the President signed legislation to implement the PTPA. On February 29, 2008, the President signed legislation to extend the Andean Trade Preference Act (ATPA) until December 31, 2008.
Peru registered a trade surplus of $8.8 billion in 2006. Exports reached $23.7 billion, partially as a result of high mineral prices. Peru's major trading partners are the U.S., China, EU, Chile and Japan. In 2006, 23.0% of exports went to the U.S. ($5.9 billion) and 16.0% of imports came from the U.S. ($2.9 billion). Exports include gold, copper, fishmeal, petroleum, zinc, textiles, apparel, asparagus and coffee. Imports include machinery, vehicles, processed food, petroleum and steel. Peru belongs to the Andean Community, the Asia-Pacific Economic Cooperation (APEC) forum, and the World Trade Organization (WTO).
Foreign
Investment
The Peruvian Government actively seeks to attract both foreign and domestic investment in all sectors of the economy. The registered stock of foreign direct investment (FDI) is over $15.4 billion, with the U.S., Spain, and the United Kingdom the leading investors. FDI is concentrated in telecommunications, mining, manufacturing, finance and electricity.
Mining
and Energy
Peru is a source of both natural gas and petroleum. In August 2004, Peru inaugurated operations of the Camisea natural gas project. Camisea gas is fueling an electricity generator and six industrial plans in Lima, with other facilities in the process of switching to gas. In a second phase, liquefied natural gas (LNG) will be exported to the west coast of the United States and Mexico. The gas and condensates from Camisea are equivalent to some 2.4 billion barrels of oil, approximately seven times the size of Peru's proven oil reserves. The Camisea project, when completed, is expected to gradually transform Peru's economy, catalyze national development and turn Peru into a net energy exporter.
Peru is the world's second-largest producer of silver, sixth-largest producer of gold and copper, and a significant source of the world's zinc and lead. Mineral exports have consistently accounted for the most significant portion of Peru's export revenue, averaging around 50% of total earnings from 1998 to 2005 and 62% in 2006.
GDP (2006): $93.3 billion.
Annual growth rate (2006): 8.0%.
Per capita GDP (2006): $3,368.
Natural resources: Iron ore, copper, gold, silver, zinc, lead, fish, petroleum, natural gas, and forestry.
Manufacturing (16.7% of GDP, 2006): Types--Food and beverages, textiles and apparel, nonferrous and precious metals, nonmetallic minerals, petroleum refining, paper, chemicals, iron and steel, fishmeal.
Agriculture (9.2% of GDP, 2006): Products--Coffee, asparagus, paprika, artichoke, sugarcane, potato, rice, banana, maize, poultry, milk, others.
Other sectors (by percentage of GDP in 2006): Services (44.9%), mining (6.8%), construction (5.8%), fisheries (0.6%).
Trade: Exports (2006)--$23.7 billion: gold, copper, fishmeal, petroleum, zinc, textiles, apparel, asparagus and coffee. Major markets (2005)--U.S. (30%), China (11%), Chile (6.6%), Canada (6.0%), Switzerland (4.6%), Japan (3.6%), Spain (3.3%), Netherlands (3.1%). Imports (2005)--$14.9 billion: machinery, vehicles, processed food, petroleum and steel. Major suppliers (2005)--U.S. (17.7%), China (8.5%), Brazil (8.2%), Ecuador (7.3%), Colombia (6.2%).
