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Chapter | Mining from The Report: Peru 2019

With a vast wealth and diversity of metals and minerals, Peru is rich in natural resources. Mining plays a significant role in Peru’s non-oil economy, especially in terms of exports and job creation. However, investment in the sector fell in recent years, largely owing to external headwinds such as the drop in commodity prices that begun in 2014. Internal challenges also slowed sector activity, with social conflicts and community protests delaying several projects. The sector’s development will depend on the speed and manner in which these challenges are dealt with, as well as on the reduction of bureaucratic bottlenecks and increases in investment incentives. Given the number of projects set to come on-line in the near future, the production of minerals is expected to return to more stable levels. This chapter contains interviews with Mark Cutifani, Chief Executive, Anglo American; and Nick Holland, CEO and Executive Director, Gold Fields.

Chapter | Insurance from The Report: Peru 2019

The Peruvian insurance market as a whole returned to profitability in 2018, following losses and anaemic expansion over the course of 2016 and 2017. Underwriters enjoyed the most robust returns in the life segment, particularly in personal income annuities, which have come into high demand among new retirees as reinvestment vehicles for pension withdrawals. Furthermore, overall claims fell significantly against indemnities paid out in 2017, when the El Niño climactic phenomenon precipitated widespread damage to residential and agricultural properties in the north of the country. Even as the insurance penetration rate remains low vis-à-vis uptake among Peru’s South American neighbours, the sector is expected to drive growth in the wider economy, as coverage for earthquakes, fires and other accident liabilities grows alongside investments in mining and construction. This chapter contains an interview with Jorge Ramos, CEO, Sura (Peru).

Chapter | Capital Markets from The Report: Peru 2019

While the economy has increased three-fold since the turn of the century, capital markets have not proved able to emulate this growth. With trading volumes falling again in 2018, it is clear that markets need to see more dynamic growth in terms of size and liquidity. Efforts to increase penetration should see the high market concentration give way to more diverse participation from individuals and companies of all sizes and sectors. A cornerstones to this will be ensuring the business community and the wider population are made more aware of the financial benefits that capital markets can bring. Looking to the 2020s, question marks remain as to whether Peru will be able to bolster the size and penetration of its capital markets in a way that more closely reflects the scope and dynamism of its economy. This chapter contains an interview with Marco Antonio Zaldívar, Former Chairman, Lima Stock Exchange.

Chapter | Banking from The Report: Peru 2019

The banking crises of the 1980s and 1990s have left Peru with a highly concentrated, conservative banking system that is on one of the region’s most solid foundations, boasting strong capital and liquidity. The sector has retained a positive outlook from global credit ratings agency Moody’s since November 2017, which last reaffirmed this view in October 2018, predicting a recovery in loan growth, stable asset risk and solid profits to bolster capital buffers. However, though domestic lending to the private sector has increased, provision of credit remains comparatively low, at 41.1% of GDP. Furthermore, despite significant progress to increase banking penetration, financial inclusion metrics remain below the Latin American average. If Peru’s financial system truly embraces the digital era, financial inclusion indicators should improve, representing a chance for banks to vastly grow their customer base. This chapter contains an interview with Gianfranco Ferrari, CEO, Banco de Crédito del Perú.

Chapter | Economy from The Report: Peru 2019

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.

Report | The Report: Peru 2019

Peru has seen relatively stable economic growth and significantly reduced the number of people living in poverty. Still, there have been multiple cases of corruption, but the government of President Martín Vizcarra Cornejo, who took office in 2018, has focused efforts on combatting this and stabilising the political climate. Nevertheless, challenges to ensuring sustainable development remain.