Peru's Business and Investment Guide 2015-2016

Update of Peru’s Business & Investment Guide in Peru 2015-2016 in English

From the beginning of the new millennium through 2014, Peru has achieved an impressive cumulative growth of 116% of its Gross Domestic Product (GDP), accompanied by a cumulative inflation during the same period of just 52%, the best rates of their kind in all Latin America.

This growth comes with the challenge of sustaining it, which in turn demands an increase in productivity based on improvements in educational quality, infrastructure, domestic security, productive efficiency and modernity, the reduction of bureaucracy, and the implementation of much- needed reforms. Indeed, with a GDP per capita measured in Purchasing Power Parity (PPP) estimated at approximately US$11,989 for 2014, in the short term, Peru will cross a development threshold where it will be forced to avoid falling into a group of nations inserted in the so-called “middle-income trap”. This trap occurs when the growth of GDP per capita slows considerably after a period of rapid growth and could be attributed to a phenomenon of complacency with the relative success achieved, causing the continuous reforms so necessary for progress to stagnate. With all of this, Peru is just beginning its "demographic bonus" period, where 65% of its population between the ages of 15 and 64 reach their highest records of production, consumption, savings and investment. Therefore it cannot fail to take advantage of this historic moment of definitive consolidation, as a country making the jump from a developing economy, to a developed nation.

GDP and GDP per capita (Purchasing Power Parity - PPP) of the principal economies of Latin America (2014 y 2019)

Source: International Monetary Fund (IMF), World Economic Database, October 2014

Peru is one of the most important countries in Latin America. Its diverse characteristics include a variety of climates, a vast territorial expanse, significant natural resources, people with great skills and high academic standards, and a solid economic and industrial background. Peru is considered one of the world’s leading emerging markets, with a solid recent history of economic stability based on an uninterrupted average annual growth of 5.3% of its Gross Domestic Product (GDP) since 2000, as well as people who are notable for their productivity and entrepreneurship. These factors make Peru an excellent destination for foreign investment.

The main traditional exports of Peru are gold, copper, petroleum oil, natural gas, zinc, lead, iron, fishmeal and coffee; and its principal trading partners are the United States, China, Bolivia, Brazil, Chile, Colombia, Ecuador, Argentina, Venezuela, Switzerland, South Korea, Japan, Canada, Germany, Spain, Holland, the United Kingdom, Mexico and Italy.

Peru has signed a number of Free Trade Agreements (FTAs) covering approximately 95% of its exports as of December 31, 2014. Additionally, Peru entered into the Framework Agreement for the Pacific Alliance in April 2011. Peru forms part of this trading bloc together with Chile, Colombia and Mexico, which is aimed at encouraging regional integration and the greater growth, development and competitiveness of their economies, as well as achieving the free circulation of goods, services, capital and people.

The Peruvian economy for 2015 is expected to be the first fastest growing in Latin America, with an increase of 4.8% of its GDP (4.2% as at March of 2015). This is driven principally by private consumption (4.5% for 2015) domestic demand (estimated in 4.7% for 2015) improved employment indicators, and the recovery of total exports. At the same time, the development of fixed private investment in 2015 is expected to be situated at 3% (5.2% for 2016) while increase in public investment is estimated at 12% for 2015.

In one single generation, we Peruvians have made a transformation based on the consolidation of democracy, stability, the opening of the economy and the creation and development of a policy of social inclusion with economic growth. Peru is a thriving country with a privileged geographical location which makes it a potential hub for companies in South America and a reliable investments destination.