City of Lima
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ECONOMY: Peru’s economical strength has been increasing in recent years due to the growth by market-oriented economic reforms and privatizations in the 1990’s, and also with the promotion of trade and investment. The percent increase has been nearly 7% a year. The GDP grew 9.8% in 2008, 8.9% in 2007, 7.7% in 2006 and 6.8% in 2005. More recent expansions in the economy have been boosted by new construction, mining, and private investment, exports and domestic consumption. Oil price increases, global foods and the fiscal surplus for three years straight was 2.1% of GDP. Public external debt dropped to $19.2 billion in 2008 and a record $31.2 billion for foreign reserves.
Peru boasts of its well managed economy. Increased revenues are attributed to better tax collections and expenditures. Along with that, private investments are on the rise and becoming more broad-based. Peru obtained investment grade status in 2008. The current administration is hard at work in bringing more small businesses into the formal economy, and decentralization initiatives, in spite of the global financial crisis and a drop in the GDP growth.
FOREIGN TRADE: In April 2006 the U.S. and Peru signed the U.S.-Peru Trade Promotion Agreement (PTPA). In June 2006 the PTPA was ratified by the Peruvian Congress and by the U.S. Congress in December 2007. After several changes to its environmental and intellectual property laws were made, the Peruvian Government approved and put into forth the PTPA on February 1, 2009.
Peru’s major trading partners are the U.S., China, European Union, Switzerland, Canada, and Japan. Its main exports are petroleum, gold, copper apparel, tin, coffee, non-ferrous ores, electrical machinery, plastics, vehicles, steel and cereals. Peru belongs to the Andean Community, the Asia-Pacific Economic Cooperation (APEC) forum and the World Trade Organization (WTO). It also has limited trade agreements with Chile and Mexico, and also has signed a more robust agreement with Canada and Singapore. It has recently signed a trade agreement with China and is in negotiations with the European Union.
FOREIGN INVESTMENTS: Leading investors in foreign investments are the U.S., Spain, and the United Kingdom. The FDI (foreign direct investment) is concentrated in telecommunications, mining, manufacturing, finance and electricity. The registered stock of foreign direct investment (FDI) at the end of 2008 was $18 billion.
MINING AND ENERGY: In August 2004, Peru launched operations of the Camisea natural gas project. This has enhanced the economy and energy matrix by reducing the country’s dependence on imported diesel fuel. This is due to the wealth of resources found in both its natural gas and petroleum. Hopefully, by 2010, Peru will be exporting its own natural gas to Mexico, and possibly the U.S., through the LNG project, currently under construction. This project will be able to liquefy natural gas so that it can be easily exported.
FOREIGN RELATIONS: Peru and its surrounding neighbors have enjoyed friendly relations, with the exception of occasional tension with Chile. In November of 1991 the two countries signed three agreements that put to rest the remaining obstacles that held up implementing the 1929 Border Treaty. This treaty officially ended the 1879 War of the Pacific. But, in 2005 a declaration of maritime borders by Peru’s Congress sparked a new feud with Chile. This had to do with fishing pacts made in the 1950’s that agreed to these maritime borders. Though the Garcia Administration submitted arbitration of this dispute to the International Court of Justice at the Hague in hopes of coming to an acceptable agreement, resolution is still not made and the friction between the 2 countries still rises up occasionally.
Peru and Ecuador for a long time had disputes regarding their border differences. Finally, in October 1998, a peace agreement was signed to resolve these highly volatile issues. They are now in agreement and are coordinating an internationally sponsored border integration project. The U.S. Government is one of four guarantor states that is involved with facilitating the 1998 peace accord between Peru and Ecuador. The U.S. has pledged $4 million to both the Peru-Ecuador border integration project and the demining efforts along the common borders.
Peru became a member of the Asia-Pacific Economic Cooperation (APEC) forum in 1998, bringing closer ties and economic relations between Peru and Asian nations. The APEC summit was held in Peru in 2008.
Peru has been a member of the United Nations since 1949 and a member of the Security Council in 2006 and 2007. Javier Perez de Cuellar served as UN secretary General from 1981 to 1991.
Peru supports 210 troops in peacekeeping operations in Haiti under the UN’s MINUSTAH.
U.S.-PERUVIAN RELATIONS: The United States and Peru have very strong relations. In June of 2000 relations between the 2 countries were uneasy due to the re-election of President Fujimori. However, in November of that same year things improved with the installation of an interim government and the inauguration of the government of Alejandro Toledo in July 2001. The United States continues to promote the strengthening of democracy and human rights safeguards in Peru and its integration into the world economy.
There is bilateral cooperation in reducing and ceasing the transport of illegal drugs, particularly cocaine, through the ports of Peru. Part of the Government supported efforts are to establish an alternative development program for coca farmers in the key coca growing areas, hoping to voluntarily reduce and eliminate coca cultivation. This effort is funded by the Department of State’s Bureau of International Narcotics and Law Enforcement Affairs (INL) and the U.S. Agency for International Development (USAID).
Investment and tourism from the U.S. in Peru has grown quite a bit in recent years. The U.S. is the number one trade partner of Peru and as the U.S. –Trade Promotion Agreement continues Peru will thrive and become an even stronger country in its economy.
About 200,000 US citizens visit Peru annually for business, tourism, and to study, also about 16,000 Americans reside in Peru and more than 400 US companies are represented in Peru.
