Time to tune in
Latin American companies turn up the volume on global growth
Country Insights: Peru highlights
As other parts of the world grapple with weak growth, Latin America is moving ever higher up the global business agenda. Peru, in particular, has staged a remarkable comeback from the difficult years of the 1980s and 1990s. After years of conflicts with Maoist terrorists and other challenges, Peruvians have seen a steady increase in income and a dramatic drop in poverty.
According to World Bank data, since 2004 alone, per capita income has nearly doubled, rising from US$5,530 in purchasing power parity terms to US$9,440 in 2011. Over the same period, the national poverty rate has plunged, falling from 58.7% in 2004 to 27.8% in 2011. Exports, a key source of foreign exchange, have grown from 14.8% of GDP in 1999 to 28.7% in 2011.
As in most Latin American economies, high commodity prices have helped boost growth. But the most important factors in Peru’s turnaround are its sound economic policies. As a result of responsible macroeconomic stewardship, the country’s sovereign debt ratings have achieved investment grade ratings from Standard & Poor’s and Moody’s. Last August, S&P praised the administration of President Ollanta Humala for its infrastructure investments. The ratings agency estimates that these projects could be instrumental in increasing Peru’s copper exports threefold within the next three years.
Prudent macroeconomic policies have yielded similar results in other Latin markets, as well as in Asia, Africa and Europe. These days, Peruvian companies can choose from a host of potential partners and world markets. This wealth of possibilities would have been unimaginable two decades ago.
This report focuses on these booming opportunities. It explores Peruvian companies’ increasing engagement with external markets, their goals in growing their business abroad, the strategies they are using to expand and the challenges they face.
Fast facts: Peru
- Peru’s GDP grew from US$26.3 billion in 1990 to US$176.9 billion in 2011. (World Bank). But for 2012, the IMF estimated actual GDP growth as moderating to 6.3%.(Peru Title IV Consultation, IMF, February 2013)
- Over the past five years, Standard & Poor’s and Moody’s have raised Peruvian sovereign debt to investment grade levels. (World Bank; “Peru’s Rating Outlook Raised by S&P as Mining Boosts Growth,” Bloomberg, 28 August 2012)
- In 2011, Peru’s exports totaled US$47 billion. Traditional exports have increased by seven and a half times in dollar terms since 2000 to US$36 billion in 2011, representing 77% of the country’s total. Non-traditional exports, accounting for the remaining 23% of total exports, also increased in the same time period five times over, to US$10 billion in 2011. (Peru – selected issues, IMF, 30 January 2013)
- Between 2011 and 2021, Peru’s total exports are expected to rise another US$22.5 billion, led by metals (US$8.6 billion) and manufacturing (US$7.693 billion). (Oxford Economics)
- For 2012, the IMF indicated that Peru’s debt-to-GDP ratio had dropped to 19%, among the lowest in the region.. (Peru – selected issues, IMF, 30 January 2013)
For more information
|Download the Peru highlights report here.|