Economical overview
Peru's economy has long been strong, but
poverty is widespread. Good export income from, among
other things, large-scale mining and extensive fishing
mainly benefits a smaller part of society. The
population of the mountains and the slums of cities
often live in self-sufficiency and find their livelihood
outside the formal economy.
More than 60 percent of export income comes from the
mining industry, which together with other industries
accounts for just over a third of GDP. By far the most
important among the minerals is copper. Tourism is a
growing source of income. The public sector has lost
much weight and today accounts for a much smaller part
of the economy than it did 25 years ago.
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The informal sector is believed to be at least as
large as the legal economy. An important contribution to
the economy is the money that Peruvians abroad send home
to the family.
Since the turn of the millennium, Peru has
experienced uninterrupted growth, which was second
highest in Latin America after Panama. This is primarily
due to rising commodity prices but also to a growing
domestic consumption that has caused the wheels to spin
in the construction industry, other industry and trade.
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Through the large influx of foreign investment, Peru
has been able to build up a large reserve of foreign
currency.
Growth has led to increased tax revenue for the
state, but seen from a regional perspective, the tax
burden is low. The state also misses some tax revenue as
tax evasion is suspected to be a common occurrence.
When Left candidate Ollanta Humala took office as
president in the summer of 2011, many feared that he
would start pursuing an economic policy characterized by
major government intervention, but he instead pursued a
market-friendly policy. Promising that economic policy
would take greater account of citizens' social needs, he
tried to fulfill some of this by using the increased tax
revenues for social projects, but voters were still
dissatisfied with the pace of reform.
One problem in this context is the lack of structures
that exist in rural areas to handle possible development
grants. During Humala's years in power, growth also
slowed, with a fall in government revenue as a result.
The economic situation pushed him to try to accelerate
foreign exploitation in sensitive areas, which led to
conflict with local groups.
fLASHBACK
President Fujimori's crisis program in the early
1990s (see Modern History) led to a slowing of
inflationary inflation and a more balanced budget, but
the price deteriorated for the Peruvians. This was
partly due to abolished subsidies that led to higher
prices for goods and services and partly to the
disappearance of hundreds of thousands of jobs within
the state bureaucracy.
The deregulated economy contributed to stable growth
in 1994-1997 and the sale of several state-owned
companies attracted many foreign investors to Peru. The
economy deteriorated again from 1998, when fishing and
agriculture were affected by the weather phenomenon of
El Niño (see Geography and climate), while
financial crises in the outside world and political
turmoil affected trade and investment.
Following the global downturn in 2001, the economy
developed strongly under the rest of Alejandro Toledo's
government until 2005: GDP grew by over five percent per
year. Large foreign investments in mines and natural gas
produced positive results, while increased foreign
demand drove up commodity prices. Toledo was not able to
create many new jobs or increase wealth for the poor,
while the successor Alan García, president from
mid-2006, succeeded somewhat better, including through a
number of construction projects and welfare programs.
Although government revenues had continued to grow,
dissatisfaction with García's liberal market policy
increased, which, according to trade unions, only
benefited businessmen and multinational companies. More
and more strikes and demonstrations were carried out in
2008 in protest of rising prices and what was called a
neoliberal policy.
Growth reached a peak of almost ten percent in 2008,
but with the global financial crisis that developed the
same year, export income and investment fell rapidly,
but inflation, which had increased for some time.
However, Peru managed the crisis relatively well thanks
to strong government finances and a large foreign
exchange reserve. Despite the crisis, GDP also grew
somewhat in 2009. The following year the trend reversed
and growth reached just over 8 percent, but then slowed
slightly.
FACTS - FINANCE
GDP per person
US $ 6,947 (2018)
Total GDP
US $ 222,238 million (2018)
GDP growth
4.0 percent (2018)
Agriculture's share of GDP
6.7 percent (2017)
Manufacturing industry's share of GDP
12.8 percent (2017)
The service sector's share of GDP
54.1 percent (2017)
Inflation
2.2 percent (2019)
Government debt's share of GDP
26.2 percent (2018)
External debt
US $ 68,083 million (2017)
Currency
solar
Merchandise exports
US $ 49,066 million (2018)
Imports
US $ 41,553 million (2018)
Current account
- US $ 3,594 million (2018)
Commodity trade's share of GDP
41 percent (2018)
Main export goods
copper, gold, oil and oil products, agricultural
products and fish
Largest trading partner
China, USA
2006
August
Former presidential candidate is prosecuted
Former presidential candidate Ollanta Humala is charged with murder and
torture during the fight against guerrillas in the 1990s. Later in the year, he
is also charged with soliciting rebellion (see January 2005). He is eventually
released from all charges. His brother Antauro, who led the 2005 uprising, is
later sentenced to 25 years in prison.
June
Alan García wins the presidential election
June 4th
In the second round of the presidential election, Alan García wins Ollanta
Humala, with 52.6 percent of the vote. García was previously President from 1985
to 1990.
April
Congressional elections and first round of presidential elections
April 9
In the first round of the presidential election, the left candidate Ollanta
Humala receives 30.6 percent of the vote and ex-president Alan García of the
Social Democratic Apra Party 24.3 percent. Trean Lourdes Flores gets 23.8
percent. The parliamentary election results in a victory for an alliance between
the Union Party of Peru (UPP) and the Humalas Nationalist Party (PNP). The
collaboration breaks down shortly thereafter.
2005
November
Fujimori grips
Former President Alberto Fujimori is arrested in Chile where he arrived from
his refuge in Japan.
July
Victims of war receive damages
The government begins to pay compensation to victims of the guerrilla war in
the 1980s and 1990s.
January
Insurgent officer demands the resignation of the president
The regime introduces an emergency permit in a province where about 150
reserve officers occupied a police station and took hostages. The group's
leader, the former Major Antauro Humala, demands that President Toledo resign.
Humala is arrested during negotiations with the security forces. In 2000, he had
also participated in an uprising against Fujimori's rule with his brother, the
retired Colonel Ollanta Humala.
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