Peru is a major producer of copper and gold, as well as a prolific exporter of liquefied natural gas, seafood and agricultural products. In addition, it has significant oil and gas reserves, and is a major tourist destination, with some 4.5m tourists visiting annually. Many of these visitors flock to the country’s Incan archaeological sites, including Machu Picchu, Lima, Cusco, Arequipa, Lake Titicaca and the vast Amazonian region. Tourism brings in about $5bn in annual revenue, and the growth of air passenger numbers, as well as the entry of new low-cost airlines to the market, has preceded a countrywide airport expansion project. Work is also under way to add a second runway and new terminal building to Lima’s Jorge Chávez International Airport.
In 2017 Peru was badly affected by flooding, which caused widespread damage along the country’s northern coast and the Amazon basin. Reconstruction work is under way, while at the same time the government strives to narrow infrastructure and housing gaps in order to provide the growing population with much-needed structures and services.
Culture & Demographics
Home to 32.8m people with an annual growth rate of 1.2%, Peru is the fourth-largest country in South America by population. In terms of ethnicity, 59.5% are mestizo (mixed Amerindian and Spanish ancestry), followed by Quechua (22.7%), white (4.9%), black or of African descent (1.6%) and Amazonian (1.1%); the remaining 6.7% do not identify with any category. There is also a significant Asian population, stemming from Chinese and Japanese immigrants who arrived in the country during the 20th century. Peru’s official language is Spanish, while Quechua, the Incan civilisation’s language, is still widely spoken in the highlands. In addition, the pre-Incan Aymara language is widely spoken throughout the towns surrounding Lake Titicaca.
Approximately 80% of the population is Roman Catholic, a result of Spanish colonisation, while around 12% are Evangelicals and Protestants. Many indigenous people have fused Catholicism with Pachamama, the pre-Columbian belief system that venerates the earth as a deity.
Peru is also well known for its diverse musical strengths, including the panpipes and guitars of Huayno; music from the Andes region; the criolla music from the coast, played with guitars; and the cajón, a wooden box used for percussion, which has its roots in Spanish, gypsy and African music. Cumbia, a genre that originated in Colombia but is ubiquitous in Latin America, can be heard everywhere from bars and parties to public transport. The country also boasts numerous respected writers, including novelist and Nobel Prize laureate Mario Vargas Llosa, who wrote several books that were later turned into films; and poet César Vallejo, who is considered to be one of Latin America’s most important 20th-century poets.
Peru’s history is similar to that of other Latin American countries, with sophisticated pre-Hispanic cultures, a Spanish conquest leading to three centuries of colonisation, followed by independence and periods of political instability. Reforms led to an interval of economic growth, followed by a span of dictatorships in the mid-20th century. Left-wing guerrilla groups the Shining Path and the Túpac Amaru Revolutionary Movement emerged in the 1980s and posed a serious threat to the government, stymieing economic growth and tainting the country’s image as a safe destination for investment and tourism.
The last few decades have seen the country return to relatively stable economic growth, a reduction in the number of people living in poverty and a growing middle class with increased purchasing power. This has buoyed the economy as domestic consumption has strengthened. However, this era of stability has also seen instances of corruption, and successive governments have been followed by scandals that continue to affect the country’s political system.
Prior to the rise of the Inca, a number of civilisations flourished in Peru, all vying for regional control and coveted trade routes. The country’s ancient stone monuments are some of the oldest in the Americas, pre-dating the pottery and stone monuments created by the Chavin culture. The Nazca lines, located to the west of Nazca city and close to the country’s southern coast, were etched into the desert in around 500 CE, depicting tropical animals found in the faraway Amazon region. Meanwhile, the Moche, or Mochica people, developed large-scale irrigation projects along Peru’s northern coast and built temples of mud brick, or adobe, to honour the sun and moon near the modern-day city of Trujillo. At the same time, the Wari, or Huari group, developed close to what is now the city of Ayacucho. They were superseded in regional control and influence by the Chimú kingdom in around 900 CE.
Around the same era, the Chachapoyas inhabited the cloud forests of the eastern Andes, constructing circular stone buildings like those still visible at Kuélap, which is one of the world’s largest ancient citadels. These likely acted as fortifications to guard against a litany of Wari and Inca invasions.
The Incas emerged around 1400 CE and, despite having created monumental temples and leaving substantial linguistic heritage, their regional domination lasted for a relatively short period of time. Their first leader, Manco Capac, established a dynasty of at least 10 rulers. During that time, the Incas extended their empire from their native capital of Cusco beyond the boundaries of modern Peru, reaching central Chile in the south and the equator to the north, and as far as the border between Ecuador and Colombia. This helped to spread the Quechua language, which is still spoken in much of Peru and neighbouring countries.
In 1533 Francisco Pizarro led invading Spaniards into Cusco, taking over the Incan capital. Though they put up a fierce resistance, the Inca retreated to Ollantaytambo, which remained their stronghold for the next three decades. In 1542 Spain created the Viceroyalty of Peru, establishing Lima as the capital, which later became the political and economic hub of Spain’s conquered territories across South America. After the definitive defeat of the Incas in 1572, Spain began exploiting the country’s bountiful gold and silver mines and enslaving the locals. Potosí, in present-day Bolivia, became the axis of the colony’s mining production and the largest urban centre in the Americas, while Lima’s Port of Callao became a major centre of international trade.
Despite numerous uprisings, colonial rule continued until the early 19th century, at which point the war of independence took place. This was in parallel to independence wars in other Spanish colonies across the Americas, sparked in large part by the Napoleonic invasion of Spain in 1808. Due to conservative attitudes of the Peruvian aristocracy, the presence of many Spaniards in Peru and the concentration of Spain’s colonial military power in Lima, Peru remained loyal to Spain at first. This allowed for effective suppression of indigenous uprisings. However, Peru’s independence was aided by outsiders and by foreign interest in its wealth.
A general from Argentina, General José de San Martín, aimed to seize control of northern Peru’s silver reserves from the Spaniards and achieve independence for Argentina. This was to be accomplished by undermining Spanish control of South America. In 1820 his forces occupied the port of Pisco, and when the Spaniards withdrew their forces, he was able to enter Lima. Peru declared its independence from Spain in 1821 and again in 1824, when Simón Bolívar came from Colombia to defeat the remaining royalist forces at the Battle of Ayacucho.
Opposing forces vied for power after the 1826 departure of Bolívar, who had acted as a stabilising influence, and the new republic was characterised by political instability. A liberal constitution was adopted in 1828, but the country later came to be governed by a succession of military figures who seized power illegally. These included General Agustín Gamarra and General Felipe Salaverry, as well as Andrés de Santa Cruz, a military commander who proposed forming a confederation between Peru and Bolivia. He held power for three years until the 1839 Battle of Yungay, where he was defeated by joint Peruvian and Chilean forces.
General Ramón Castilla assumed the presidency in 1845, ruling until 1851 and once more between 1855 and 1862. During his rule he exploited extensive guano deposits, which were used for gunpowder and fertiliser along the coast and on the country’s islands. He implemented a tax on foreign companies engaged in its extraction, which helped to provide the country with its new-found wealth.
Castilla also abolished the enslavement of blacks and stopped the taxation of indigenous peoples. This change led to the import of thousands of Chinese workers in order to bolster the country’s labour supply. Castilla also introduced public education at the primary and secondary levels.
Instability emerged once again in the 19th century, when the Spanish sent naval troops to the Pacific to protect the rights of Basque immigrants in Peru and attempt to regain control of its former colony. Spain only finally recognised Peru’s independence in 1869. Military rule in the country continued until Manuel Pardo’s rule between 1872 and 1876. Pardo was a member of the newly formed Civilian Party, which represented merchants and landowners. He embarked on a large-scale programme aiming for internal development, which included the construction of a trans-Andean railway.
Peru went to war with Chile in 1879. This was largely due to rivalry over mineral deposits in the Atacama Desert, which at the time belonged to Peru but is now a part of Chile. Peru also lost the city of Iquique. Chile invaded, entering Lima in 1881 and causing widespread destruction. The conflict was resolved via the Treaty of Ancón in 1883. The province of Tarapacá was similarly relinquished to Chile.
With Peru bankrupt and morale low, political change was accelerated. Nicolás de Piérola founded the Democratic Party, winning the 1895 general elections and championing social change. The party implemented greater voting rights and opened schools, and economic development was greatly aided by increased production of commodities such as copper, cotton, sugar and wool. In addition, foreign investment began to go into the mining sector.
Under the presidency of Augusto Leguía, who led the country between 1908 and 1912, and again from 1919 to 1930, economic growth continued into the 20th century. Using loans from US banks, the country began a series of expensive public works projects. Rights to oil fields were given to the US-based International Petroleum Company, which built a refinery to supply the local market with petrol and oil. A new constitution passed in 1920 sought to protect indigenous peoples’ lands from seizure and development. However, the law was violated, giving rise to demands for further reforms. These demands were made particularly strongly by the newly formed Peruvian Communist Party.
In 1930 a military junta led by colonel Luis Sánchez Cerro overthrew Leguía, opening the doors for Sánchez Cerro to win elections in 1931. However, these elections were perceived to be fraudulent. The American Popular Revolutionary Alliance (Alianza Popular Revolucionaria Americana, APRA) was founded in Mexico City in 1924. APRA planned to become a pan-continental political party, and it still exists in Peru today. Supporters of APRA organised an uprising in the city of Trujillo and took control of the military garrison. Sánchez Cerro then ordered the bombing of the city, killing many insurgents but eventually leading to Sánchez Cerro’s assassination in 1933. He was succeeded by General Óscar Benavides, who settled a border controversy with Colombia, allowing Peru access to the upper Amazon after the port of Leticia had been ceded to Colombia in 1922. Benavides also outlawed APRA.
During the Second World War, Peru supported the US and authorised Allied use of airfields and ports. It supplied oil, cotton and minerals to Allied Powers, severing ties with the Axis Powers in 1942. Peru’s support of the Allied war effort likely aided procurement of a favourable settlement in a boundary dispute with Ecuador, which it had invaded.
Peru became a dictatorship in 1948 after General Manuel Odría seized power, ousting President Víctor Raúl Haya de la Torre, who sought refuge in the Colombian embassy. He remained there for five years. Odría served as president until 1956, during which time Peru’s economy benefitted from increased demand for minerals from the US. The election of Manuel Prado in 1956 saw the country briefly return to democracy, but it became a dictatorship again 1968. This took place under a military junta led by Juan Velasco Alvarado, which imprisoned political opponents, expropriated the holdings of the International Petroleum Company and launched a programme of economic nationalism that affected other US investments in the country. The government took control of essential industries by demanding that a majority of stock in foreign companies active in Peru be held by Peruvians. The country’s state-owned oil company Petroperú was thus founded in 1969, and, bolstered by the nationalism of the oil industry, it aimed to further expand hydrocarbons output and exports.
Climate of Reform
In May 1970 an earthquake struck the country, killing some 80,000 people, causing major damage and straining the economy. This strain was worsened by the suspension of seafood exports in 1972, largely as a result of El Niño, a recurring climatic phenomenon in the region.
Following these events, the dictatorship tightened its control on the populace. This included the introduction of press censorship, with the closing of some radio stations and newspapers, and the deepening of its ties with China and the Soviet bloc.
The economy was also affected by a decline in copper prices and fish meal exports, and foreign debt that escalated amid the junta’s undertaking of largescale copper and oil projects. Under the leadership of General Francisco Morales Bermúdez Cerrutti, a new junta was formed in 1975. He pursued a somewhat less nationalist agenda, denationalising fishing and re-opening the oil sector to private investment. Later, the junta committed itself to restoring constitutional rule, creating the Constituent Assembly in 1978 and drafting a new constitution which was signed in 1979.
Alberto Bustamente Belaúnde of the Popular Action party won the 1980 elections at the head of a coalition. He introduced free market policies, but the economy suffered during his administration as a result of lower commodity prices, high interest rates on foreign debt, and further damage by El Niño in 1982 and 1983. This, coupled with depreciation of the national currency, led to the creation of a new monetary unit called the inti in 1986. With the country in the midst of a serious economic crisis, the government also faced further difficulties in the form of regular sabotage, kidnappings and attacks carried out by the Shining Path and the Túpac Amaru Revolutionary Movement guerrilla groups.
The first two decades of the 21st century have seen Peru’s political environment settle somewhat following the arrest and imprisonment of fugitive former president, Alberto Fujimori. However, several successive presidents have also been implicated in corruption scandals, and it remains to be seen how long the political stability will last (see overview).
Peru has been one of the top-performing Latin American economies over the past decade, and according to the World Bank’s 2018 “Peru Financial System Stability Assessment”, prospects remain positive. Despite a challenging external environment, the country’s annual average GDP growth has exceeded 5% over the last decade. However, the economy suffered in 2017 as a result of further damage inflicted by El Niño, and inflation averages approximately 3.25% per year.
Increasing investment, particularly in mining and infrastructure, is expected to boost economic growth in coming years. The government is striving to close the infrastructure gap with major investment, as well as private-public partnerships in public works. Mining and seafood and agricultural exports form the backbone of Peru’s economy, but a rise in non-traditional sectors saw the country achieve record export performance in 2018, totalling $47.7bn. This was up 7.5% on the previous year, and exports in 2019 are forecast to increase further. New free trade agreements with countries such as India and Australia, the creation of the Pacific Alliance and the successful renegotiation of the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership are also expected to contribute to continued export growth.
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