Economy
From The Report: Peru 2014
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Over the course of the past decade Peru has recorded impressive economic growth, posting rates in excess of 6% from 2010-12. Though the pace of growth is estimated to slow to between 5.2% and 5.4% in 2013, mainly due to external shocks, observers are cautiously optimistic about Peru’s prospects for continued economic development. While the mining and hydrocarbons sectors continue to account for the bulk of exports as well as foreign direct investment, the recent growth of non-primary sectors, in particular construction, retail and services, point to increasing economic diversification. This is largely driven by greater domestic demand, expected to grow at 6.5% and 5.8% in 2013 and 2014, respectively. With a stable macroeconomic environment, prudent fiscal management and a number of new free trade agreements, Peru is well positioned for continued expansion. This chapter contains interviews with Karl de Gucht, EU Trade Commissioner; Luis Miguel Castilla Rubio, Minister of Economy and Finance; Javier Illescas, Executive Director, ProInversion; and Reubens Amaral Junior, CEO, Banco Latinoamericano de Exportaciones.

Articles from this Chapter

Overview

Moving up: Strong macroeconomic growth continues as development progresses
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In a little more than two decades Peru’s modern economic narrative has been drastically transformed thanks to continued macroeconomic growth and prudent fiscal planning. Much of this transformation is owed to high commodity prices, which have ensured the maximum value for Peru’s natural resources, though growth in recent years has also been driven by an expanding construction sector and strong internal demand. Economic planning must now look towards sustaining growth in the long term as the country…

Interview

OBG talks to Luis Miguel Castilla Rubio, Minister of Economy and Finance
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Interview:Luis Miguel Castilla Rubio In the face of a decelerating Chinese economy, what is your strategy to maintain domestic growth? LUIS MIGUEL CASTILLA RUBIO: Peru has achieved growth at a rate of roughly 6.5% over the past decade, based on four separate but interrelated strategic pillars. First, sound economic policy has allowed us to retain gains made in periods of high commodity prices during less favourable times. In 2013 the country’s fiscal stabilisation fund will reach $8.5bn,…

Interview

OBG talks to Luis Miguel Castilla Rubio, Minister of Economy and Finance
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Interview:Luis Miguel Castilla Rubio In the face of a decelerating Chinese economy, what is your strategy to maintain domestic growth? LUIS MIGUEL CASTILLA RUBIO: Peru has achieved growth at a rate of roughly 6.5% over the past decade, based on four separate but interrelated strategic pillars. First, sound economic policy has allowed us to retain gains made in periods of high commodity prices during less favourable times. In 2013 the country’s fiscal stabilisation fund will reach $8.5bn,…

Interview

OBG talks to Karel de Gucht, EU Trade Commissioner
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Interview:Karel de Gucht How does the wave of expropriations and nationalisations in Venezuela and Argentina affect EU confidence in the legal stability of Peru? KAREL DE GUCHT: Each country needs to be treated at on an individual basis, and companies are well aware of this. Businesses all over the world recognise the solid economic fundamentals and stable framework for investors that have been patiently created by Peru over the past decade. That is why trade and investment has increased…

Interview

OBG talks to Karel de Gucht, EU Trade Commissioner
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Interview:Karel de Gucht How does the wave of expropriations and nationalisations in Venezuela and Argentina affect EU confidence in the legal stability of Peru? KAREL DE GUCHT: Each country needs to be treated at on an individual basis, and companies are well aware of this. Businesses all over the world recognise the solid economic fundamentals and stable framework for investors that have been patiently created by Peru over the past decade. That is why trade and investment has increased…

Interview

OBG talks to Javier Illescas, Executive Director, ProInversión
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Interview:Javier Illescas Outside of the mining sector, which is where investment has so far been concentrated, what opportunities exist for international investors? JAVIER ILLESCAS: Peru has many other opportunities available beyond traditional mining investments, though that sector is expected to continue to see the largest share of investments in the coming years. For example, the textile and industrial sectors have grown significantly over the past few years, as demand for Peruvian exports…

Analysis

Eastward bound: Promising economic integration with Asia continues
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The world’s largest and most populous continent, Asia is home to more than half of the global population. It also boasts some of the world’s fastest-growing economies with a significant demand for natural resources. The relative geographic proximity and rich natural resources of Peru provide a straightforward explanation for the ever-increasing trade between the two continents. The US and Europe’s sluggish recoveries from the global financial crisis have served only to expedite the process.…

Analysis

Labouring away: Unemployment remains stable as the formalisation of the workforce advances
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Though improving rapidly, there are several obstacles to the development of the labour market in Peru ranging from brain drain and recurring strikes to inflexible hiring and firing practices and an inadequate amount of qualified staff. However, these challenges generally pale in comparison to the task of formalising the workforce. According to figures from the World Bank, as of 2011 76% of Peru’s population between the ages of 15 and 64 was actively involved in the country’s labour force, though…

Interview

OBG talks to Rubens Amaral Jr, CEO, Banco Latinoamericano de Comercio Exterior
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Interview:Rubens Amaral Jr How will the free trade agreements (FTAs) between Latin American countries increase regional trade? RUBENS AMARAL: FTAs are critical for growth in Latin America, as they grant access to new markets and force discussions on economic openness, productivity and job creation. Agreements like the Dominican Republic-Central America FTA would allow regional economies to leverage their competitive advantages such as relatively low labour costs, turning them into exports…

Analysis

Wind of change: Pension reform could increase liquidity and aid market development
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While the Superintendency of Banking, Insurance and Pension Funds (Superintendencia de Banca, Seguros y Administradoras de Fondos de Pensiones [AFP], SBS) has spent the past year implementing reforms aimed at increasing competition in the sector, fund managers are eager to see the second stage focusing on investment regulation. Regulators have announced plans to reduce the restrictions that limit pension funds’ use of certain investment instruments. In particular, pension funds hope that the reforms…

Analysis

On the verge: Micro and small businesses lay the foundation for production
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A strong middle class, the backbone of thriving economies, could be the key to development for many Latin American countries. Not exempt from this model, Peru has already taken strides to support the growth of small businesses in the hopes of stimulating more internal commerce and self-sustainability. Structure While the concept of small and medium-sized enterprises has become quite universal in the past few years, Peruvian legislation further organises these businesses into an even more detailed…