The Peruvian economy has become increasingly market oriented, with major privatizations completed since 1990 in the mining, electric/power, and telecommunications industries. Thanks to strong foreign investment and the cooperation between the former Fujimori administration, the IMF, and the World Bank, growth was strong in 1994–97 and inflation was brought under control.
In 1998, El Niño's impact on agriculture, the financial crisis in Asia, and instability in Brazilian markets undercut growth. 1999 was another lean year for Peru, with the aftermath of El Niño and the Asian financial crisis working its way through the economy. Lima did manage to complete negotiations for an Extended Fund Facility with the IMF in June 1999, although it subsequently had to renegotiate the targets. Pressure on spending grew in the run-up to the 2000 elections.
Growth up to the year 2005 has been driven by construction, investment, domestic demand, and exports to different world regions. Peru's economy is one of the better-managed in Latin America. Over the next few years, the country is likely to attract both domestic and foreign investment in the tourism, agriculture, mining, construction, industry, petroleum and natural gas, and power industries.
In April 2006 Peru signed a Free Trade Agreement with the United States, becoming the second country in South America to sign it; now both countries wait for the approval of the terms by their respective congresses. Peru is negotiating a Free Trade Agreement with Chile, Mexico, Singapore and India which may be finished between March and April 2006.
Peru currently has a free trade agreements with the Andean Community, which is composed of Colombia, Ecuador, Bolivia and Venezuela. It also holds free trade agreements with many of the countries in Mercosur as well as Thailand, and during the recent APEC summit, Peru voiced intentions to sign free trade agreements with China, Japan, South Korea.
It is also pushing for a free trade agreement with the European Union. All these negotiations will broadly expand the markets in which the Peruvian products are traded. Peru has a great export potential in agricultural products, textiles, clothing, shoes, petroleum derivatives, natural gas, minerals, as well as fish and seafood products, tourism, and manufacturing.
In 2005 Peruvian exports reached US$ 17.1 billion (an increase of 34.6% compared to 2004) and it is expected to grow 35% for this year reaching US$23.5 billion at the end of 2006. Also, the economy has shown a healthy grow in all its sectors (energy, construction, commerce, fishing, manufacturing, tourism, etc) in 2005 growing over 6.67% (one the fastest growth rates in South America) and it is projected to grow a strong 7% for 2006 considering that commodity prices, which Peru is a great producer, will have an estimated increment of 25% on average.
For the next five years (until 2010) the Peruvian government has registered over US$ 10 billion in private investment (both domestic and foreign) in the mining and energy sectors, as well as investments of US$ 15 billion in other sectors such as industry, commerce, tourism, seafood and agriculture, which will keep the economy growing at healthy levels of 5% or more, anually.
Unfortunately poverty in Peru is still high, with a rate of 51.2% of the total population, however the poverty rate is being reduced slowly and it is expected to be reduced to 20% of the population in 10 years.
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article Peru
