Peru has experienced strong economic growth in recent decades driven by exports of minerals and agricultural goods, but also suffers from political instability and corruption. The document analyzes Peru's current economic and political situation, noting GDP growth of 2.7% in 2022 but contraction in the non-primary sectors due to social protests. It discusses challenges including dependence on exports and foreign investment, particularly from China, as well as dysfunctional politics that have led to many changes in leadership and stalled reforms.

1. Peru’s Economic
and Political
Situation
Fudan Development Institute
March 2023
Carlos Aquino Rodriguez
Director, Centre for Asian Studies
San Marcos National University
caquinor@unmsm.edu.pe

2. Table of Contents
• Introduction
• Current situation of Peru economy
• Peru’s political situation
• Challenges ahead for Peru economy
• Annex: Peru relations with China

3. Introduction
• Peru is a country of 33 million people living in a
territory with an area of 1,285,216 km2.
• In 2021 its GDP was of 225.6 billion US dollars. In
2022 GDP anual economic growth rate was 2.7%.
• In the last two decades it has been one of the fastest
growing economies in Latin America.
• The main engine of that growth has been the export
of goods, mainly of the mining and the non-
traditional agricultural exports.
• Exports increased from a value of 6.8 billion dollars
in 2000 to 63.2 billion in 2022 (data from Peru
Ministry of Trade and Tourism).

4. Peru in the last two
decades has been
one of the fastest
growing economies
in Latin America

5. IMF: World economic Outlook update, january 2023

6. Peru Central Bank
(BCRP): Weekly
Informative
Report- February
16th, 2023
GDP grew 0.9% in December 2022.
In December there was a contraction of
the non-primary sectors, associated with
the social protests that occurred during
the month. For their part, the primary
sectors grew driven by mining, particularly
by the greater extraction of copper.

7. Graph 1: Real
Per Capita
Gross
Domestic
Product
Source: Peru Central Bank,
Annual Report 2021

8. Graph 2: Per
capita GDP in
US$ and
international US$
(PPP)
Source: Peru Central Bank,
Annual Report 2021

9. Graph 3: Peru’s
exports and
imports, US$
MM
Source: Ministry of Foreign Trade and
Tourism

10. Table 1: Peru is a
country rich in natural
resources, especially
in mining
Source: Peru Central Bank,
Annual Report 2021

11. Source:/ Peru Central Bank, Annual Report 2021/ 来源： 秘鲁中央银行，《2021年年度报告》
MAIN NON-TRADITIONAL AGRICULTURAL PRODUCTS/主要非传统农产品
(Million US$)/（百万美元）
1/ Average percentage change 2014-2021./1 2014-2021年平均百分比变化。
Source:BCRP and SUNAT./ 来源：秘鲁中央储备银行和秘鲁国家税务总局。
Subtotal/小计
Total/合计
Most popular products/最受欢迎的产品 Average % Change 2012-
2021/2012-2021年平均变化
百分比
Fresh grapes/新鲜葡萄
Blueberries 2/ / 蓝莓2/
Fresh avocados/新鲜鳄梨
Fresh asparagus/新鲜芦笋
Fresh mangoes/新鲜芒果
Shrimp and prawn feed/小虾和明虾饲料
Organic bananas/有机香蕉
Cocoa and other uses/可可和其他用途
Quinoa/藜麦
Asparagus prepared/芦笋制品
Canned artichokes/洋蓟罐头
Fresh onions/新鲜洋葱
Frozen food/冷冻食品
Vegetables prepared in vinegar/醋制蔬菜
Prepared or in canned mangoes/芒果罐头

12. Table 2: Peru´s
exports of
goods in 2022
Source: Ministry of Foreign Trade and
Tourism

13. Table 3: Peru´s
foreign trade in
2022
Source: Ministry of Foreign Trade and
Tourism

14. Peru’s economy
background:
• At he end of the 1980s Peru economy was in bankrupt state.
There was a deep reccesion, hyperinflation, state owned
companies were also bankrupt, and terrorist groups ravaged
the country. The country was also cut-off from the
international financial system and political parties were
discredited.
• The new government elected in 1990 implemented
economic reforms that made Peru economy more open and
atractive to foreign investment.
• The state presence in the economy diminished, tariff rates
were lowered, labor market was liberalizated (changes in
employment laws that lower the costs of hiring and firing
workers), and fiscal discipline was imposed.
• Terrorist groups were crushed. The Peruvian economy grew
with no interrumption from 1993 until 2019, except for
1998.
Source: https://manifold.bfi.uchicago.edu/read/the-case-of-
peru/section/12466d4e-8123-4775-be11-3cc718678fcf

15. Peru’s economy
background:
But one of its main weakness is that this economic growth
have not created much formal employment. The poverty rate
decreased but regional disparities persist.
FDI has been one of the main reason for the emergence of a
dynamic export sector. The increasing exports of mineral and
energy products as also non-traditional agricultural products
is a proof of that.
A new Constitution in 1993 helped to a establish a more free
and open market economy, and limited the role of the state in
it.

16. Peru political situation
• The main problem of Peru are its institutions,
which are of low quality, that foster
inefficiency and corruption, in particular its
political system.
• From 1990 there has been 11 Presidents and
nearly all of them come from political parties
that were created just a few months or years
before elections. From 2018 to now there has
been 6 Presidents in power. Many of them did
not have previous political experience.
• Most of the Presidents from 1990 onwards
has been accused of corruption and some of
them are in jail or in judicial process.

17. Challenges ahead for Peru economy
The present political situation in
Peru is also the result of a
dysfunctional political system.
Now there is a stalemate in the
political situation because, even if
most of the population want
earlier elections, the Congress
does not allow that. This has
caused some social protests
But in the other hand earlier
elections (with no meaningful
reform in the political system) will
do little, or nothing, to improve
the political situation. And some
political groups want to change
the present Constitution.
Peru economy grew in the last
years, despite the political
instability. That could no longer
be the case.

18. Challenges ahead for Peru economy
• Peru is an open economy. The most open in Latin America, together with
Chile and Mexico. So, its economic performance depend also on the world
economy situation.
• Foreign trade in goods and services accounted for 55.3% of GDP in 2021.
Export of goods represented 28% that year (data of Peru Central Bank). In
2022 32.9% of those exports went to China, and 49.2% to Asia.
• The stock of FDI at the end of 2021 was 52.2% of GDP. Chinese investment
represented 32% of that stock.

19. Annex: Peru relations with China
• In 2022 Peru exports of goods to China were 32.9% of total, while to
US was only 13.6%. Imports of Peru from both China and US were
around the same proportion, 25% of the total for each one. Peru is
dependent of the Chinese markets for its exports, mainly of copper,
which account for 30.5% of Peru´s total exports. China was the
destination for 73.6% of Peru´s copper exports.
• Regarding investment, at the end of 2021 there was a stock of 117.8
billion dollars of FDI in Peru, of which around 32% was from China.
The amount of FDI from US in Peru is not exactly known, but
accordingly to US data at the end of 2019 the stock was of 7.5 billion
dollars. Probably US investment is bigger than that, but not as big as
of China.

20. • According to Peru data, which is not reliable because it does not
record all FDI in the country, at the end of 2022 there was a stock of
30.19 billion dollars of FDI, of which 10.7% of the total was from US,
and from China only 3.7% of the total.
• Anyway, in the last years there has been no new US investment in
Peru, but China continue investing in the country.
• For example, now China Southern Power Grid is interested in buying
Enel Peru operations, of a company from Italy, for 3 billion dollars.

21. • Peru and China are in negotiations on upgrading their FTA, in force
since 2010
• Peru joined China´s BRI in 2019
• Relations between both countries are in good shape.
• In 2024 the APEC Summit will be held in Peru
• But developments in the internal and external situation of Peru could
impact in relations with China, and in the activities of Chinese
companies in Peru.

22. Bibliography
• BBC: https://www.bbc.com/news/world-latin-america-63971274
• CNN: https://www.cnn.com/2022/12/07/americas/peru-president-castillo-congress-dissolves-intl/index.html
• UNAL: https://periodico.unal.edu.co/articulos/crisis-en-peru-decadas-de-corrupcion-e-inconformismo-social-
que-no-encuentran-salida?fbclid=IwAR3OzA9niFkLwMsJV9mSm-mWnZRa6uAB_OttlnjRkqcLKR0jmOcu_e684XE
• La Republica: https://larepublica.pe/sociedad/2023/02/05/arequipa-el-tercer-distrito-rico-del-peru-tiene-
estadio-pero-no-agua-potable-lrsd-147920
• Peru Central Bank: Nota Semanal 23/02/2023 https://www.bcrp.gob.pe/docs/Publicaciones/Nota-
Semanal/2023/ns-08-2023.pdf
• Peru Central Bank: Resumen Informativo Semanal 16/02/2023
https://www.bcrp.gob.pe/docs/Publicaciones/Nota-Semanal/2023/resumen-informativo-2023-02-16.pdf
• Peru Central Bank: Memoria 2021 https://www.bcrp.gob.pe/publicaciones/memoria-anual/memoria-
2021.html (in english: https://www.bcrp.gob.pe/publications/annual-report/annual-report-2021.html)

23. • Reuters: https://www.reuters.com/business/energy/enel-peru-says-
state-run-chinese-power-firm-eying-possible-purchase-2023-02-24/