Economy
From The Report: Peru 2018
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After a political transition that threatened business confidence and investment projects, Peru’s economic outlook has improved considerably. As one of South America’s top performers due to its structural reforms and fiscal discipline, Peru is seeing an economic rebound due to rising commodity prices and its export-oriented mining sector. The Ministry of Economy and Finance (Ministerio de Economía y Finanzas, MEF) projects that GDP growth will accelerate from 2.5% in 2017 to 3.6% in 2018, bolstered by a 17.5% and 4.5% increase in public and private investment, respectively. The longer-term outlook is yet more optimistic, with forecasts for higher average growth and domestic demand over the 2018-21 period. The MEF forecast greater private investment will support fiscal consolidation efforts from 2019, reactivating the virtuous cycle of investment, employment and consumption. This chapter contains interviews with Luis Alberto Moreno, President, Inter-American Bank of Development; Alberto Ñecco, Executive Director, ProInversión; and Roque Benavides, President, National Convention of Private Business Institutions.

Articles from this Chapter

Overview

Prime investments: Accelerating growth forecasts supported by a smooth political transition and increased public spending
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After a political transition that threatened business confidence and investment projects in Peru, local and international economic agents have regained optimistic outlooks. As one of South America’s top performers due to its structural reforms and fiscal discipline, Peru is seeing an economic rebound due to rising commodity prices and an export-oriented mining sector. The business community has largely embraced political shifts. Key associations – such as the National Confederation of Private…

Analysis

Mind the gap: Public-private partnerships are increasingly prioritised to foster improvements in infrastructure
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The Peruvian government is stepping up infrastructure development, announcing plans to award $4.5bn in public-private partnership (PPP) contracts in 2018 – up from $3.4bn in 2017 – to boost growth and trade potential. In January 2018 Alberto Ñecco, executive director of ProInversión, announced the agency would survey 18 PPP finalisations by end-2018. This represents 50% growth in the number of PPPs and a four-fold funding rise on 2017, indicating higher public commitment to developing big-ticket…

Interview

Bridging the gap: Alberto Ñecco, Executive Director, ProInversión, on the institution’s evolving role and tackling the infrastructure deficit
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Interview :Alberto Ñecco What are ProInversión’s four strategic pillars? ALBERTO ÑECCO: We have identified four strategic pillars that are crucial in both our long and short-term execution plans. First, we must strive to become a centre of excellence in terms of advising the government in the formulation and structuring of public-private partnership (PPP) projects. To achieve this, it is critical we work with highly trained and experienced consultants, and rely on standardised contracts…

Interview

Steps to success: Roque Benavides, President, National Convention of Private Business Institutions, on education, private sector participation and digitalisation as pillars of development
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Interview :Roque Benavides What measures can be taken to enhance the country’s non-primary industries? ROQUE BENAVIDES: To understand how non-primary industries can be enhanced, the first step is to identify the challenges that need to be overcome, namely corruption, informality, centralisation and populism. Overcoming such barriers is directly linked to enhancing the skills and knowledge of non-primary industry professionals. We live in the digital era, which requires professionals to…

Analysis

Facilitating operations: Measures to simplify tax and investment procedures, as well as incentivise business formalisation
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In October 2017 the World Bank published its “Doing Business 2018” report, which measures the ease of doing business and investing in various global economies. Peru ranked 58th out of 190 countries in the index, placing it third in Latin America, behind Mexico (49th) and Chile (55th), and just ahead of Colombia (59th). While this represented a four-place fall from 54th in the 2017 edition of the report, the country remained in the same relative position in Latin America – in 2017 it placed…

Overview

Business Barometer: Peru CEO Survey
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In the second OBG Business Barometer: Peru CEO Survey, we found that C-suite executives in the country are overwhelmingly optimistic about the business outlook: 84% report positive or very positive expectations of local business conditions in the coming 12 months. This persists despite ongoing challenges, such as the reconstruction efforts following the El Niño weather pattern in 2017, and a series of corruption scandals and parliamentary crises that have continued into 2018. The favourable perspective is likely supported by the Central Reserve Bank of Peru’s forecasts of accelerating GDP growth in 2018 and 2019 – the economy is projected…

Overview

CEOs positive about economic: prospects, despite adversity
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In June 2018 the Central Reserve Bank of Peru (Banco Central de Reserva del Perú, BCRP) revised its 2019 growth outlook, forecasting GDP would expand by 4.2%. This represented a more optimistic view compared to its prediction of 4% in March 2018. The institution left its projection of 4% for 2018 unchanged. These figures reaffirm the sentiment expressed in the 2018 edition of the OBG Business Barometer: Peru CEO Survey: despite some challenges, economic prospects have been steadily improving since mid-2017. The country experienced a number of obstacles in 2017. For one, the El Niño weather phenomenon resulted in substantial damage to coastal…

Overview

Tax liabilities: Impacts of the trend towards lower corporate tax rates on developed and developing economies – Peru 2018
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Recent decades have seen a downward convergence in corporate tax regimes as advanced, emerging and developing economies moved to grab a bigger slice of the global investment pie. Headline corporate tax rates have fallen by 20 percentage points since the early 1980s. Alongside lower average rates, special tax incentives aimed at capturing investment have emerged, further reducing the effective rates paid by transnational corporations. In the aftermath of the 2007-08 global financial crisis, many countries were compelled to slash spending and raise revenue in order to rein in precipitous budget deficits. Even as tax revenues as a share of GDP in…