Economy
From The Report: Peru 2019
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Peru has emerged as one of the best performing economies in Latin America. The country possesses strong fundamentals, combining robust growth, a falling fiscal deficit, rising export revenue and a credit rating second only to that of Chile. Nevertheless, challenges remain in terms of ensuring sustainable development. Peru has undoubtedly benefitted from its openness to private enterprise and foreign investment, along with its prudent fiscal policy. Despite issues with corruption, Peru possesses an independent central bank and a well-functioning investment authority. Furthermore, it showed regional leadership in implementing anti-corruption legislation. GDP is expected to grow by 3.7% in 2019 and in 2020, underpinned by infrastructure projects, rising exports and increased investment in mining sector. While the economy is steadily improving, more needs to be done to achieve the country’s development objectives. This chapter contains interviews with Carlos Oliva, Minister of Economy and Finance; and Julio Velarde Flores, President, Banco Central de Reserva del Perú.

Articles from this Chapter

Overview

New prospects: Prudent fiscal and monetary policy and increased investment support growth
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Across a range of metrics Peru has emerged as one of the best performing economies in Latin America. The country possesses strong fundamentals, combining robust growth, a falling fiscal deficit, rising export revenue and a credit rating second only to that of Chile. Nevertheless, challenges remain in terms of ensuring sustainable development. The country has undoubtedly benefitted from its openness to private enterprise and foreign investment, along with its prudent fiscal policy. However,…

Interview

Strong and stable: Carlos Oliva, Minister of Economy and Finance, on the benefits of liberalisation and sound macroeconomic policies
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Interview:Carlos Oliva What sectors of the economy is the government prioritising for foreign direct investment (FDI)? CARLOS OLIVA: The government is seeking to attract more FDI into sectors where international players have been present for many years, such as finance, construction, ICT and agro-industry. In addition, we are promoting FDI in sectors that are in their early stages of development, such as forestry, aquaculture and tourism. The untapped potential of these three sectors is very…

Analysis

Sound money: Improving taxation and formalisation to meet deficit targets
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Peru has made progress in reducing its fiscal deficit, bringing it down from 3.1% of GDP in 2017 to 2.5% in 2018, before reducing it further to 2.1% in February 2019, according to the Central Reserve Bank of Peru. Furthermore, Scotiabank Perú, the local subsidiary of the Canada-based financial institution, has forecast the deficit will be reduced to 2% by the end of 2019. The expansion of electronic payment infrastructure and strengthening of the anti-tax avoidance framework are designed…

Analysis

More to offer: Non-traditional exports and a commitment to free trade support a rising trade surplus
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According to the Central Reserve Bank of Peru, the country’s trade surplus increased further in 2018, to $7.6bn, the highest figure since 2011 and the fourth biggest on record. Though the trade balance was down from $1.9bn to $1.2bn in the first quarter of 2019, economists are still predicting a surplus. According to Guillermo Arbe, head of economic studies at Scotiabank Perú, the surplus is set to end the year at $5.5bn. This expansion in trade was driven in large part by rising agri-business…

Interview

Wait and see: Julio Velarde Flores, President, Banco Central de Reserva del Perú, on prudent measures in a time of global uncertainty
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Interview:Julio Velarde Flores How will the sector perform in 2019? JULIO VELARDE FLORES: We expect the economy to grow by almost 4% in 2019. Despite the lower than expected results in the first quarter of 2019, mainly linked to supply factors in fishing and mining, we expect private investment to accelerate from the 4.4% growth recorded in 2018. Similarly, consumption will continue to grow at a steady pace – at 3.8% – as job creation remains robust. In recent years Peru faced considerable…

Overview

Regional integration among emerging economies and a raft of: new multilateral agreements bolster international trade Shifting trade winds
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Global trade will continue to face headwinds that are dampening the outlook for growth in the coming years. According to the World Trade Organisation (WTO), trade volume grew by 3% in 2018 and is expected to decline slightly to 2.6% in 2019 before rebounding back to 3% in 2020. This may be the first time since the 2007-08 global financial crisis that growth will fall below the 3% average. Nevertheless, significant uncertainty driven by an escalating US-China tariff war, acrimonious Brexit negotiations, and wariness surrounding US involvement in several multilateral trade agreements is affecting business confidence and investment decisions. Although…

Overview

Regional integration among emerging economies and a raft of: new multilateral agreements bolster international trade Shifting trade winds
OBG
plus

Global trade will continue to face headwinds that are dampening the outlook for growth in the coming years. According to the World Trade Organisation (WTO), trade volume grew by 3% in 2018 and is expected to decline slightly to 2.6% in 2019 before rebounding back to 3% in 2020. This may be the first time since the 2007-08 global financial crisis that growth will fall below the 3% average. Nevertheless, significant uncertainty driven by an escalating US-China tariff war, acrimonious Brexit negotiations, and wariness surrounding US involvement in several multilateral trade agreements is affecting business confidence and investment decisions. Although…

Overview

Changing global migration patterns bring both challenges and: opportunities for the developing world Talent map
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As the world’s nations and businesses become increasingly interconnected, so too does the flow of global migration. According to the OECD’s “International Migration Outlook 2018”, in 2017 some 258m people resided in a country other than the one they were born in and more than 5m foreign-born persons were permanently settled in OECD countries. This flow of people not only brings benefits to the lives of the migrants themselves, but also contributes significant economic opportunities to individual businesses and states. Despite this, public opinion in many countries is turning against migration, with increasing numbers of states…