Business in Peru. Peruvian economy. Foreign trade

Course summary Doing business in Peru:

Doing business in Peru Lima Arequipa. Exports and imports. Agribusiness, textiles, Call centers, ...

Peruvian economy: Peru will lead economic recovery in Latin America with 6.25% GDP growth in 2010, according to an International Monetary Fund report.

The country’s central location on the western coast of South America makes possible its projection as a regional productive and commercial hub.

Peru has the largest city in the region, Lima with its eight million inhabitants. At the same time the port of Callao, currently undergoing expansion, is the most dynamic on this coast. In addition, the development of the South American regional infrastructure Integration Initiative (IIRSA) will consolidate Peru as an efficient bridge for connecting the markets of South America, Asia and the United States. Peru is an attractive investment destination and an efficient exporter towards all of the world’s regions.

Peru has been showing an excellent performance. During 2008, the GDP showed a 9.8% expansion placing us among the countries that grew the most in said period of time, which happened after 8 years of continuous growth. In 2009, when the majority of countries in the world shrunk in economic terms due to the international crisis, Peru registered a US$ 130,324 billion GDP, equivalent to a growth rate close to 1%.

It is to be noted that during the last quarter of 2009 Peruvian expansion bordered 5%, which showed a capacity for quick recovery in the face of the international crisis.

Economic perspectives look favorable for Peru in the coming years, based primarily on the announcement of important investment projects, plus the high expectations for domestic consumption. We should add also the trust generated in the economic agents as a result of the responsible institutional management maintained by the economic authorities through time, independently of the political party in the administration at that time.

An aspect that sets Peruvian exports apart is their diversity, which includes mining, agriculture, fishing, hydrocarbons products and diverse manufactures. Although mining is the sector responsible for an important percentage of the total of Peruvian exports, however there are also other exports like basic metals such as copper, zinc, molybdenum, iron and lead, plus precious metals like gold and silver.

The exports increased 13% in 2008 and recorded a total of US$ 31,529 million, a figure 3.5 times higher than 6 years ago. The increase was made possible through a combination of factors such as acceptable international prices despite the international crisis, diversifications of exportable offers, and the Peruvian capacity to participate in the competitive International market. Moreover, the effect that had the strengthening of Sol (Peruvian currency) against of our main commercial partners currencies.

Fifty eight percent of Peruvian exports were in mining, but these include many different metals including copper, gold, molybdenum, silver, zinc, among others. To that, one must add increasing exports of hydrocarbons, of which Peru is projected to become a net exporter in a few years.

As to Foreign direct investment (FDI), it has primarily centered on mining, industry, communications and energy; showing not only the importance of exports for Peruvian economy but also the growing strength of the domestic market.

There are numerous international Groups from all regions of the world that maintain a presence in this country. It comes from all the regions of the world. It should be indicated that investment comes from both European (the largest portion provided by Spain and the United Kingdom) and North America countries (the United States, Canada and Mexico). In addition, there is an increasing trend among our South American neighbors to invest in Peru.

A sizable portion of these foreign investments relate to use of the country’s Natural resources, providing public services, banking and tourism and infrastructure construction, within the framework of companies’ internationalization strategies. In the case of investments originating from Asia, Africa and Oceania, the most important are investments in mining, hydrocarbons and also large corporations providing machinery and electrical goods

Peru has bilateral Free Trade Agreements FTA China, Singapore, Chile, US TPA, Canada, South Korea, MERCOSUR (ACE), EU FTA

Free Trade Agreements of the Andean Community: MERCOSUR (ACE) (Associated), Chile, Mexico, Panama. Trade relations: India, China, Russia, ATPDEA.

The Trade Promotion agreement (TPA) signed with the United States, which enter into force since February 1, 2009, consolidates the tariff preferences granted temporarily through the Andean Trade Promotion and Drug Eradication Act (ATPDEA) that have explained a large part of the dynamism of exports in recent years, and consolidates trade policy reforms implemented by Peru during the nineties.

The negotiation of the TPA with the United States set new standards in terms of the movement of goods and services and the protection of investment, which served as the foundation for negotiating the Free trade agreements with Singapore, Canada, China and the EFTA countries, the Early Harvest Protocol signed with Thailand and the deepening of the economy complementary Agreement (ACE) with Chile.

On this same foundation, negotiations are being developed for the deepening of ACE with Mexico and the signing of Free trade agreements with Japan. In addition, Peru is negotiating an Association agreement with the European Union, a block that sets zero tariff for fishing, agriculture and textile products through the General System of Andean Preferences

Peru is also member of the Free trade area agreed upon among the Andean nations that also includes Bolivia, Ecuador and Colombia (Andean Community) and that comprises a market of nearly 100 million inhabitants. Furthermore, in the framework of ALADI, the Latin American integration Association, Peru has signed ACEs with MERCOSUR.

Finally it should be noted that since 1998 Peru has been a full member of the Asia-Pacific Economic Cooperation ©, whose market totals almost 50% of the world's population, which is being called to become a natural link between the industrialized economies of Asia and emerging economies in Latin America.

Camposol is the leading agro industrial company in Peru, the largest exporter of asparagus in the world and soon to be the first producer of avocado in the planet. By the end of 1999, the Company began its agro-industrial exports. These are processed until today in the Chao industrial complex located in the Viru province, La Libertad department.

International Economic Relations. Peru is member of: Andean Community (CAN), Asia-Pacific Economic Cooperation (APEC),  MERCOSUR (Associate), Latin American Integration Association (ALADI), Union of South American Nations (UNASUR), Latin American and Caribbean economic System (SELA), Pacific Economic Cooperation Council (PECC), Inter-American Development Bank (IDB), Economic Commission for Latin America (ECLAC), Forum for East Asia-Latin America Cooperation (FEALAC), Summit of South American Arab Countries (ASPA), Organization of American States (OEA), United Nations, World Bank, International Monetary Fund, World Trade Organization (WTO),  Rio Group, CAF, OEI ...

Departments of Peru: Amazonas, Ancash, Apurímac, Arequipa, Ayacucho, Cajamarca, Cusco, Huancavelica, Huanuco, Ica, Junín, La Libertad, Lambayeque, Lima-Provincias, Loreto, Madre de Dios, Moquegua, Pasco, Piura, Puno, San Martín, Tacna, Tumbes y Ucayali) and Callao.

Source economic data: Private Investment Promotion Agency (Peru)

Business, Peru, Economy, Peruvian, foreign trade, Doing business, Lima, Arequipa, Exports, Imports, agribusiness, textiles, Call centers, IED