Even during a period of sluggish economic growth in the important US and European markets, Peru has been able to continue posting surpluses and developing its global trade portfolio, in large part due to a raft of free trade agreements (FTAs) that have expanded and diversified its international partners.
A BALANCING ACT: Peru’s 2011 trade surplus reached $9.3bn according to the Central Reserve Bank of Peru (Banco Central de Reserva del Perú, BCRP), an increase of $2.5bn (37%) on 2010’s $6.8bn. Totalling $2.9bn in 2004, the trade surplus expanded significantly in the years leading up to the global financial crisis, peaking in 2007 when it reached $9bn. This was followed by consecutive years of a weak external environment and a shrinking surplus brought on by the economic havoc following the global financial crisis in 2008-09.
Total export value climbed to $46.3bn in 2011, according to figures from the BCRP, a 30.1% increase on 2010’s total of $35.6bn. The value of non-traditional exports increased 32.6% in 2011, outpacing growth in 2010 of 23.5%. Non-traditional exports registered $10.1bn in 2011, representing 22% of total exports. Agriculture, textiles and fishing products account for the majority of non-traditional exports. Revenues from traditional exports rose 28%, according to the BCRP, mainly thanks to surging commodity prices as Peru’s mining industry accounts for a massive 60% of total exports.
Exports are expected to continue rising in 2012, albeit at a slower pace, with the Ministry of Foreign Trade predicting a further 9.4% increase to $49bn.
Imports have grown alongside Peru’s expanding economy as demand for goods and services continues to rise. According to BCRP figures, imports increased by 28.3% in 2011 to $37bn from 2010’s total of $28.8bn. Fuel imports climbed 40% to $5.9bn, accounting for 15.5% of the total. The US was the top exporter to Peru, followed by China and Brazil. The import of raw materials led all segments, growing by 27.3% in 2011 with a total of $18.4bn, primarily due to a 40% increase in the import of fuels and a 22% rise in raw materials used for agriculture and industry. If successful, plans to triple oil output over the next four years will see Peru once again become a net exporter of crude; it currently relies on fuel imports to satisfy local demand.
TRADING PARTNERS: The Peru-China FTA, which came into force in March of 2010, has had a significant impact on bilateral trade between the two nations, with China ousting the US as Peru’s largest trading partner in 2011. China purchased $6.95bn worth of Peruvian exports in 2011, up 28% on the previous year. Switzerland, the largest importer of Peruvian gold, became the country’s second-largest trading partner, purchasing $5.8bn worth of exports as the surging price of gold resulted in a 51% increase compared with the previous year. The US, which has had an FTA with Peru since 2009, fell to third as its imports from Peru dropped 6% to $5.7bn. Both Canada and Japan saw a 21% increase in the importation of Peruvian goods, with Canada rising to $4bn and Japan to $2.2bn. Chile placed sixth, increasing its purchases from Peru by 44% to $2bn.
Peru is expecting a total of seven FTAs to come into force in 2012, while trade pacts with regional neighbours Mexico (February 2012) and Panama (May 2012) have already come into effect. Already signed FTAs with Guatemala and Costa Rica are expected to come into force by the end of 2012 as well, while the vital trade agreement with the EU could be approved during the second half of the year. In addition, Peru is a member of the Andean Community as well as an associate member of Common Market of the South (Mercosur). Agreements with the Asian nations of South Korea, Thailand and Singapore are also already in place.
A total of $43.1bn of the annual export value of $46.3bn (93%) went to nations possessing some form of bilateral trade agreement with Peru. The ever-expanding FTAs have already provided diverse trading partners and had a dramatic effect on Peru’s foreign trade. The emergence of China as the country’s largest trading partner is just one element of a pattern of increased movement of goods between South America and Asia.