The investment-oriented reforms of the Fujimori years caused Peru to be one of the fastest-growing economies in the world between 1994 and 1997. Much of this growth was easy, however, because in many cases Peru’s factories were simply returning to the level of production they had achieved before the chaotic 1980s.
Peru’s stock market plummeted in early 1995 because of the “Tequila Effect” caused by Mexico’s Zapatista revolution and the collapse of its economy. Peru’s economy stagnated between 1998 and 2001 because of a variety of other factors, including the El Niño floods of 1998, global financial turmoil, and the collapse of the Fujimori government in 2001.
García maintained investment-friendly policies upon taking office in 2006, and Peru’s economy continues to grow. In 2007, the percent growth in the gross domestic product (GDP) was 7.2 percent. This is up from 5.2 percent in 2002. The actual GDP hovers around $78.4 billion. García has continued to control the fiscal deficit; inflation, at 1.7 percent, is the lowest in South America, and Peru is second only to Chile, among South American countries, in the growth of its exportations. The key sectors of the Peruvian economy include manufacturing, agriculture, mining, retail services, and banking.
In the near term, foreign investment in mining, oil and gas, and tourism will play an important role in Peru’s economy. Major players in the mining arena include the U.S.-owned Yanacocha gold mine in the Cajamarca area and the Canadian-owned Antamina mine southeast of Huaraz. The Camisea Gas Field Project, a $1.6 billion project led by U.S. and Argentine companies, is the major company pumping gas from the Amazon basin north of Cusco. A related $2 billion gas refinery has been built by the Kellogg Brown & Root unit of U.S.-owned Halliburton on the Peruvian coast near Paracas. President García, who is currently in negotiations with U.S.-based Hunt Oil and Brazilian PetroGas, is expected to encourage future oil growth.
More recently, the Inter-American Development Bank has estimated that Peru’s GDP will grow 4 percent more than the rest of the world during 2010.
© Ross Wehner and Renée del Gaudio from Moon Peru, 3rd Edition