Economy
From The Report: Peru 2017
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The Peruvian economy is at an interesting crossroads. Over the last two decades it has been one of the fastest-growing economies in the region, enjoying macroeconomic stability, a strong mining sector, an open economy, and growing agro-industry and services sectors. Positive GDP growth has continued despite the end of the commodities boom. According to World Bank statistics, Peru had a nominal GDP of $189.1bn in 2015, making it the sixth largest among Latin American nations. The country has an open economy, with trade representing 45% of GDP. Yet the growth rate has slowed and the initial impetus of a first wave of structural reforms has faded. The question now is whether the new government that took office in July 2016 can address problem areas, implement further reforms and re-accelerate the economy.

This chapter contains interviews with Alfredo Thorne, Minister of Economy and Finance; Peter Shaw, Head of Latin America, Fitch Ratings; and Álvaro Quijandría, Executive Director, ProInversión.

Articles from this Chapter

Overview

Going strong: Unlike other countries in the region, Peru has been able to maintain stable growth
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The Peruvian economy is at a crossroads. Over the last two decades it has been one of the fastest-growing economies in the region, enjoying macroeconomic stability, a strong mining sector, an open economy, and growing agro-industry and services sectors. Unlike some of its neighbours, Peru has been remarkably resilient to global headwinds. Positive GDP growth has continued despite the end of the commodities boom. Yet the growth rate has slowed and the initial impetus of a first wave of structural…

Viewpoint

A programme that works: Alfredo Thorne, Minister of Economy and Finance, on the new Law for Reconstruction
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Viewpoint:Alfredo Thorne In light of the devastating effects of floods caused by the El Niño phenomenon during the first trimester of 2017, the government has worked on a plan for the country’s reconstruction and rehabilitation. Thus, a bill was proposed to Congress that improves the Obras por Impuestos (Works for Taxes) scheme. On April 25, 2017 the bill passed as the Law for Reconstruction. There are three aspects that need close consideration when analysing the laws behind the Works…

Interview

Consolidating stability: Peter Shaw, Head of Latin America, Fitch Ratings, on managing commodity price fluctuations and foreign currency debt
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Interview: Peter Shaw What steps can Peru take to reduce its exposure to lower commodity prices? PETER SHAW: Policymakers have a well-developed track record and consistent, credible and flexible policy frameworks to manage commodity price volatility without risking macroeconomic and financial stability. Moreover, the government has built international reserves to absorb external financing shocks or manage the impact of depreciating pressures, due, for instance, to the presence of financial dollarisation.…

Analysis

Ebb and inflow: A pipeline of projects should help to boost both public and private investment
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Steady economic growth in Peru may have masked a potential problem: investment has been falling over the last three years. The country’s GDP grew by 2.4% in 2014, 3.3% in 2015 and 3.9% in 2016, an impressive performance in the context of low commodity prices and contraction of some of the larger economies in Latin America. But across those same three years, the gross fixed investment value decreased. It fell by 2.5% in 2014, 5% in 2015 and by 5% again in 2016, according to the central bank, Banco…

Analysis

All in: The government has recently introduced a new tax package
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By January 2017, after six months in office, the government of President Pedro Pablo Kuczynski had put into effect the main components of a tax reform package designed to support and accelerate economic growth. Among the key aims of the changes were to unblock and stimulate public and private investment, simplify tax payment processes and help smaller enterprises. Vat Rates The core change to the tax system was a decision to cut the rate of value-added tax (VAT) by one percentage point…

Analysis

In the open: A new strategy is in place to help more workers move to the formal sector
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Economists have various ways of defining and measuring informality. According to the government think tank National Centre of Strategic Planning (Centro Nacional de Planeamiento Estratégico, CEPLAN), the informal economy includes any economic activity conducted outside of the reach of state regulation. The informal sector is also described as all economically productive units that are not registered with the tax agency, the National Superintendency of Customs and Tax Administration (Superintendencia…

Interview

Bridging the gap: Álvaro Quijandría, Executive Director, ProInversión, on upcoming and ongoing infrastructure projects
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Interview:Álvaro Quijandría What types of infrastructure projects are being given priority in the coming years? ALVARO VQUIJANDRÍA: The pipeline of projects for 2017-18 includes 39 projects, costing approximately $4.43bn in 2017 and an additional $10.3bn in 2018. These are investments that have either high or medium potential to be completed without facing significant challenges. The bulk of projects in 2017 will be concentrated in the transport and energy sectors. In transport, the main…