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Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

An economic model country for the past two decades, Peru's growth peaked at an average of 6% between 2004 and 2012. Even though Peru faced economic difficulties in the past couple of years due to the pandemic, the country's economic situation has improved, with growth levels reaching an estimated 10% in 2021. The strong recovery was mainly driven by a boost in Peru’s main exports (copper, gold, silver, zinc), higher commodity prices, and rising demand from China and the US, as well as continued government support to households and businesses, which increased consumption. The Peruvian economy is expected to continue growing in the coming years, albeit at a slower pace, with the IMF predicting a GDP growth of 4.6% for 2022 and 4.5% for 2023.

Peru recorded a budget deficit of 5.3% of the GDP in 2021, but it is expected to decrease to 4.1% in 2022 and remain stable in 2023. Inflation increased to 3.2%, but the Central Bank should tighten its monetary policy to keep inflation withing the target of 2%, with the IMF forecasting inflation rates at 2.5% in 2022 and 2.3% in 2023. Furthermore, although public debt increased to 35% of GDP in 2021, mainly due to the impacts of the pandemic, Peru still has one of the lowest debt-to-GDP ratios of Latin America thanks to the prudential fiscal policy in force since the early 2000s. Additionally, the IMF anticipates the government debt to remain relatively stable in 2022 and 2023, at 36.9% and 38.5%, respectively. In order to address the situation of economic crisis related to the pandemic, the government developed a comprehensive economic relief and aid to support companies and protect vulnerable population through cash-transfer, tax payment deferrals and credit guarantees for the private sector. The fiscal stimulus package combines with the country's high vaccination rates pushed Peru to a strong recovery in 2021 - a trend that's expected to continue in 2022.

Although the unemployment rate in Peru doubled during the early stages of the pandemic, unemployment decreased in 2021, reaching 8.7%. According to IMF estimates, the country's unemployment rate is expected to return to pre-pandemic levels in 2022 and remain stable, at 6.5%, in 2023. However, the informal economy continues to employ a large part of the active population. Moreover, the country has high levels of inequality, with a significant concentration of wealth, and a poverty rate of 20.2%. About 7 million Peruvians now live in poverty, 44% of whom are in rural areas. There are serious regional disparities in poverty throughout the country, with the highest numbers being in the Andean and Amazonian regions.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 230.87205.46e225.86231.69246.72
GDP (Constant Prices, Annual % Change) 2.2-11.0e10.04.64.5
GDP per Capita (USD) 6,962e6,1346,6776,7817,150
General Government Balance (in % of GDP) -0.6-6.0-5.3-4.1-4.1
General Government Gross Debt (in % of GDP) 27.135.1e35.036.938.5
Inflation Rate (%) 2.11.8e3.12.52.3
Unemployment Rate (% of the Labour Force) 6.613.0e8.76.56.5
Current Account (billions USD) -2.161.580.910.34-0.91
Current Account (in % of GDP) -0.90.80.40.1-0.4

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Peru’s varied geography is reflected in the country’s economy. The abundance of resources is found mainly in mineral deposits in the mountainous regions, while its extensive maritime territory has traditionally yielded excellent fishing resources. However, due to its complicated geographical features (such as the arid coast, the rugged Andes and the hard-to-reach jungle), Peru has a rather small agricultural area, which occupies only 1.7% of the territory. Still, the sector is fairly significant compared to the size of the country's arable land. Agriculture contributes to 7.5% of Peru's GDP and employs 27.3% of the active population. The country’s main agricultural products are cotton, sugarcane, coffee, wheat, rice, maize, quinoa, and barley. Peru is also one of the world's leading exporters of artichokes, mangoes, citrus, avocado, and grapes. Although all sectors of the Peruvian economy were negatively impacted by the pandemic, agriculture remained strong through 2020 and 2021, mainly because small farmers whose livelihoods depend on their harvest kept working despite the COVID-19 crisis. Another reason for the stability felt in the agricultural sector is that Peru only imports about 15% of the food it consumes and, with a substantial amount of food being produced in the country, harvests didn't stop.

The industry sector generates 30.4% of the GDP, employing 15.2% of the active population. Peru has a large and dynamic mining industry, mainly for copper and gold extraction. Peru has been a mining economy since colonial times, and the country is the world’s top producer of silver, the fifth producer of gold, the second producer of copper, and an important supplier of zinc and lead. Large mining has begun during the past years, which increased even more the importance of the mining sector. The country also has large reserves of natural gas and oil, although Peru is a net energy importer. The main manufacturing activities are textiles, consumer goods, food processing and fish products. Furthermore, although the Peruvian government has tried to disperse industrial production, the country's main industries are within the greater Lima area. In 2021, the industry sector saw a significant recovery from the impact of the COVID-19 pandemic, bolstered by soaring growth in one of Peru's key sectors: mining.

The tertiary sector contributes 54.1% of the GDP and employs 57.4% of the workforce. The sector consists of tourism, financial services and telecommunication, all of which have boomed due to a combined effort from both the government and private sector. The tourism and construction sectors, particularly, are very well developed. However, tourism was one of the hardest hit sectors during the early days of the pandemic. Still,  as vaccination rates rose and people's mobility increased in 2021, tourism saw a steady recovery - as well as the entire services sector.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 27.4 15.2 57.4
Value Added (in % of GDP) 6.7 30.6 54.4
Value Added (Annual % Change) 1.4 -13.0 -11.1

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Peruvian Nuevo Sol (PEN) - Average Annual Exchange Rate For 1 USD 3.383.263.293.303.49

Source: World Bank - Latest available data.

 

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Foreign Trade

Peru is a member of the WTO and very open to international trade, which represents 43.4% of GDP. The country mainly exports copper (29.9%), gold (14.6%), petroleum oils (5.1%), zinc ores (3.5%), and flours (3.3%), while it imports petroleum oils (13.6%), motor vehicles (6%), electrical apparatus for radio-telephony (3.5%), maize (1.9%), and automatic data processing machines and units (1.9%).

The country's main trade partners are China, the United States, Canada, Brazil, South Korea, Argentina, Japan, and Mexico. Peru's development strategy is based on an open and competitive economy. Trade agreements, in particular, are one of the government's main targets, as these agreements are a valuable instrument for attracting FDI and boosting productivity. Nearly 95% of Peru's exports are covered by Free Trade Agreements currently in force, which enables Peruvian products to enter, subject to the rules of origin of each trade agreement, under preferential conditions to 53 countries, including Canada, Chile, China, the member countries of the European Union, Japan, Singapore, South Korea, Thailand and the United States, among others. The country is seeking to position itself as a regional hub for trade between Latin America and the APEC countries (Asia-Pacific Economic Cooperation).

Peru has a structurally positive trade balance. In 2020, exports of goods decreased to USD 42.5 billion, mainly due to lower global demand as a result of the pandemic. Over that same period, imports also decreased, totalling USD 36.1 billion. According to the WTO, imports of services in 2020 totalled USD 7.3 billion, while exports stood at USD 3.2 billion. In recent years, there was a surge in mining production, as projects implemented during the previous years matured, which increased exports and offset the deceleration in domestic demand. Nevertheless, the 2020 slowdown of foreign demand slightly impacted the export of mining production.

 
Foreign Trade Values 20162017201820192020
Imports of Goods (million USD) 36,25639,88543,26242,28436,129
Exports of Goods (million USD) 36,83845,42249,06847,69042,411
Imports of Services (million USD) 7,9568,6579,67610,5407,319
Exports of Services (million USD) 6,3047,2326,9257,4353,238

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20162017201820192020
Foreign Trade (in % of GDP) 45.447.548.646.843.4
Trade Balance (million USD) 2,1737,0907,5137,028n/a
Trade Balance (Including Service) (million USD) -495,2664,4373,500n/a
Imports of Goods and Services (Annual % Change) 1.67.13.51.7-14.9
Exports of Goods and Services (Annual % Change) 11.88.83.4-0.5-19.0
Imports of Goods and Services (in % of GDP) 22.822.823.422.921.1
Exports of Goods and Services (in % of GDP) 22.624.725.223.922.3

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20212022 (e)2023 (e)2024 (e)2025 (e)
Volume of exports of goods and services (Annual % change) 10.35.04.24.04.0
Volume of imports of goods and services (Annual % change) 12.44.15.23.83.6

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Andean Community of Nations
The free trade treaty with the United States came into force in February 2009.
Peru signed a Free Trade Agreement with China.
Peru signed a Free Trade Agreement with the European Free Trade Association (EFTA).
Peru is part of the Pacific Alliance.
 

Main Partner Countries

Main Customers
(% of Exports)
2019
China 29.4%
United States 12.5%
Canada 5.2%
South Korea 4.9%
Switzerland 4.9%
See More Countries 43.1%
Main Suppliers
(% of Imports)
2019
China 24.2%
United States 20.8%
Brazil 5.7%
Mexico 4.4%
Argentina 4.2%
See More Countries 40.7%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Pedro Castillo (since 28 July 2021)
Vice President: Dina Boluarte (since 28 July 2021)
Prime Minister: Aníbal Torres (since 8 February 2022)
Next Election Dates
Presidential: 2026
Congress of the Republic of Peru: 2026
Main Political Parties
Peru has a multi-party system and it is difficult for a single political party to secure an absolute majority in the Congress. Thus, political groups often work with each other to form coalition alliances consisting of smaller parties. The main parliamentary forces to secure above 10 seats the country are:

- Free Peru (PL): left-wing to far-left, socialism, Marxism
- Popular Force (FP): right-wing, fujimorism, conservatism, right-wing populism
- Popular Renewal (RP): right-wing to far-right, social conservatism, economic liberalism, anti-immigration
- Popular Action (AP): centre to centre-right, reformism, nationalism, paternalistic conservatism
- Alliance for Progress (APP): centre-right, conservative liberalism, progressivism, populism
- Go on Country – Social Integration Party (AvP): centre-right to right-wing, liberal conservatism, economic liberalism
- Together for Peru (JP): centre-left to left-wing, democratic socialism, progressivism
- Podemos Peru (PP): centre-right to right-wing, social conservatism, populism, protectionism
- We Are Peru (SP): centre-right, social conservatism, Christian democracy, Christian humanism

Executive Power
The President is the chief of the state and head of the government, the commander-in-chief of the armed forces and holds executive powers which include implementation of the law and running the day-to-day affairs of the country. The President is elected by popular vote for a five-year term (not eligible for an immediate re-election) and appoints the Council of Ministers (cabinet) and Prime Minister to serve for five-year terms as well. All Presidential decree laws or draft bills sent to parliament must be approved by the Council of Ministers. The first and second vice presidents are also popularly elected, but have no constitutional functions unless the president is unable to discharge his duties.
Legislative Power
The legislature is unicameral. The parliament - called Congress - consists of 130 seats, with its members elected by popular vote to serve five-year terms. Congress ratifies treaties, authorises government loans, and approves the government budget. The President has the power to veto acts of the legislature, and in turn a supermajority (generally two-thirds majority) of legislators may act to override the veto. The president has the power to block legislation with which the executive branch does not agree.
 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID19 pandemic evolution and the most up-to-date statistics on the COVID19 disease in Peru, please visit the Peruvian government platform with the official data. Official information on the progress of the epidemic in Peru is consolidated by the Ministry of Health. The ministry provides a daily epidemiological update, which includes key national figures.

For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures
To find out about the latest public health situation in Peru and the current sanitary measures in vigour, please consult the Peruvian government platform on COVID-19 including the up-to-date information on the containment measures put in place and public health recommendations.
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.

The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the portal of the Peruvian National Superintendency of Customs and Tax Administration.

For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Peru on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan
For the information on the economic recovery scheme put in place by the Peruvian government to address the impact of the COVID19 pandemic on the Peruvian economy, please visit the website of the Peruvian Ministry of the Economy. The information on the Peruvian economic emergency plan is available here.

For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and  macroeconomic) taken by the Peruvian government to limit the socio-economic impact of the COVID-19 pandemic,  please consult the section dedicated to Peruvian in the IMF’s Policy Tracker platform.

Support plan for businesses
For the information on the local business support scheme established by the Peruvian government to help small and medium-sized companies to deal with the economic impacts of the COVID19 epidemic on their activity, please consult the portal of the Peruvian Development Bank.

For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.

Support plan for exporters
To find out about the support plan for exporters put in place by the Peruvian government, please consult the support plan for Peruvian exporting companies available on the Peruvian National Superintendency of Customs and Tax Administration website. Further information on the support plan for Peruvian exports is also available Ministry of Foreign Trade and Tourism website.
 

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