Peru’s annual GDP growth rate
as of July 2017
Steven Wyble is online content editor at Scotsman Guide Media.
Reach him at (800) 297-6061 or firstname.lastname@example.org.
Peru, a South American country of almost 32 million people as of 2016, was once part
of the wealthy ancient Incan empire. Peru still boasts riches today, with an abundance
of precious metals and other natural resources, but also faces numerous challenges on
the path to economic prosperity.
Peru’s economy grew by 3. 39 percent in May 2017, compared to the same month a
year earlier — its fastest pace in four months. The robust performance was credited
to a surge in anchovy catches that helped offset a construction slump, according to
Inei, a state statistics agency. Construction fell 3. 91 percent in May from a year earlier,
while fishing soared 280 percent thanks to the anchovy catches. Manufacturing rose
11. 31 percent as a result of increased activity at anchovy-processing factories.
Peru’s formidable mining industry, meanwhile, grew a modest 1.68 percent, according
to Inei. Several new mines opened in 2016, which boosted exports of copper, gold and
silver, according to real estate research company JLL. Peru is the world’s third-largest
producer of silver and copper and the seventh-largest producer of gold.
Peru’s economic outlook isn’t all sunny, however. Despite the better-than-expected showing this past May, the country’s economy is expected to grow by only 3 percent for the
year, down from 3. 9 percent in 2016 — although Moody’s forecasts growth to tick back up
to 3. 9 percent in 2018. Unemployment in Peru is rising as private consumption declines,
but a government policy of countercyclical fiscal spending — reduced spending and
higher taxes during economic booms, and increased spending and tax reductions during
recessions — has helped steady the economy in spite of those setbacks, according to JLL.
This spending policy has allowed the Peruvian treasury to accumulate vast reserves
and has kept government debt at less than 25 percent of gross domestic product,
according to the JLL report. President Pedro Pablo Kuczynski is investing reserve money
in new schools, hospitals and infrastructure, and has submitted a budget to Congress
proposing fiscal deficits through 2021 to pay for social spending and tax cuts. Peru’s
infrastructure needs make the country increasingly attractive to foreign investors.
Kuczynski faces staunch opposition in a Congress dominated by his political opponents, however, and compromise will be key to implementing policies designed to
grow the economy.
One obstacle to stability is a widespread corruption scandal, still under investigation,
involving Brazilian construction conglomerate Odebrecht. Two former Peruvian
presidents, Alejandro Toledo and Ollanta Humala, are implicated in the scandal and
face allegations of money laundering and influence peddling.
Additionally, flooding earlier this year damaged infrastructure throughout the country.
Kuczynski says it will cost $3 billion in the short term, and up to $9 billion over five years,
to rebuild infrastructure in affected areas. n
By Steven Wyble
Peru’s inflation rate in July 2017
Peru’s unemployment rate as of