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World > South America > Peru > Economy (Notes)

Peru - Economy (Notes)


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
Peru and the U.S. signed the U.S.-Peru Trade Promotion Agreement (PTPA) on April 12, 2006 in Washington, DC. The PTPA was ratified by the Peruvian Congress on June 28, 2006, but has not yet been ratified by the U.S. Congress. On December 9, 2006, the U.S. Congress extended the Andean Trade Preference Act (ATPA) as amended by the Andean Trade Promotion and Drug Eradication Act (ATPDEA)--jointly referred to as ATPA/ATPDEA--through June 2007. On June 30, 2007 the President signed legislation extending ATPA/ATPDEA for an additional 8 months.

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.


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions - Peruvian Neuevo Sol Exchange Rates
Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions
Peruvian Neuevo Sol Exchange Rates


Notes and Commentary
People
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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