Diversification of exports, political stability and a renewed economic policy are among the reasons why Peru is going strong despite their neighbors’ weak performance.
Despite a regional slowdown that now approaches its second year, Peru is outperforming all of its neighbors and has now become Latin America’s fastest growing economy. President Kuczynski’s election earlier this year, and the Asia Pacific Economic Cooperation Summit in Lima all show that 2016 was a standout year for Peru’s economy.
Eric Farnsworth, vice president of the Council of the Americas told CNNMoney that in fact “Peru’s rise has been among the best kept secrets in Latin America”.
Most economists agree that Peru’s economy has benefitted from a particularly high diversification of goods. Their production of copper, gold and oil, as well as a growing manufacturing sector allowed them to sidestep most of the problems that the commodities crisis wrought upon their neighbors.
Additionally, Donald Trump’s election, and his proposals to invest in infrastructure, mainly roads and bridges, has brought attention to Peru, as the price of copper increased as a result.
Peru has also benefited from its position as a pivotal economic partner in LatAm for China and the United States, which have been striving to get closer to the Andean nation in order to turn the Pacific markets in their favor. China is contesting US leadership strongly, it has spent over $18 billion into Peru over the last decade, particularly as investments in the mining sector.
That amount accounts for more than what China has given to Colombia, Chile and Ecuador combined.
Peru has also been unaffected by political instability, which allowed its investor confidence to weather the crisis unaffected.
With Peru’s GDP growing at a steady rate of over 3% annually, they are free of the concerns affecting countries like Venezuela and Brazil, which have to turn around negative growth figures. In order to cement this privileged position, Peru will have to constantly account for further fluctuations in the price of commodities, as well as the future of international agreements such as the TPP.