Peruvian Economy – Nothing but good news

December 15th, 2006

The Peruvian economy is definitely on a role with good news almost every day.
To be honest, it’s been nothing but progress since Fujimori ended hyperinflation and Toledo passed a number of good bills. For years now, the Peruvian economy has been growing by almost 8% and shows no signs of slowing down. It’s been two years since my first visit to Peru and the differences are apparent in just this short time. Some examples of this are the fact that shops in Lima now have a readily available supply of small change and cash registers are filled with money – something that just wasn’t the case only two years ago as people and business went from hand-to-mouth. Another example is that street sellers are slightly less desperate for your S./1 and leave you alone when you say no. Yet another is the Plaza Vea now stocks dozens of Plasma TVs and expensive stereo systems.

Peru has 3rd Highest Economic Growth in South America
A committee of the Chamber of Commerce has concluded a study on Peru’s economy’s position in relation to its neighbours. With economic growth this year at 7.2%, Peru is only marginally surpassed by oil-rich Venezuela and recovering Argentina with rates closer to 8%. This rate also beats the continental average of 4.6%.
As wealth grows so does national consumption, boosting the internal economy and making everyone feel richer. People can buy expensive things knowing that they don’t have to worry for their job because other people are buying expensive things from their company. Anything you spend soon comes back to be spent again.
The construction industry has grown by 14.9% this year alone as people find they have the money to build and improve homes. Companies have money to expand. Retail has grown by 9.1% as people find they have cash to spend.
According to the Chamber of Commerce inflation is falling, to a rate of 1.7%, the lowest in all of Latin America, enhancing the feeling of wealth as prices appear to be increasing slower compared to wages.

Peruvian Exports
National wealth has been increased still further this year with the Chamber of Commerce announcing that the number exports rose to 36.6%, the second highest in the continent after Chile. This will bring $23.68 BILLION US Dollars into the economy. With that kind of money flooding in its no wonder everyone is feeling richer.

World Bank Doubles Aid
In the presentation of the report “Peru: The opportunity of a different country”, World Bank regional director Marcelo Giugale outlined proposals for a doubling of financial aid to Peru. He praised recent economic reforms initiated by Alan Garcia to decentralise state services, cut Government spending including large salary reductions, and stamp out corruption throughout the country.

This new world bank aid is in addition to another source of investment funds – The Governments of Japan and Peru signed an agreement a few days ago for Japan to lend $56.9 million dollars to Peru for investment in an irrigation project. This marks a turn in the relations between to two countries which were heavily strained when Japan refused to hand over ex-President Fujimori for trial for alleged fraud and human-rights abuses.

Businesses Report Positive Year
A survey conducted by the Peruvian Chamber of Commerce in which 389 executives of Peru’s biggest companies were randomly questioned in November has concluded that 80% of Peruvian businesses consider 2006 to be a positive year, with only 0.55% saying it was negative.
50.96% of businesses report a large increase in the spending power of the Peruvian consumer while 39.45% thinking it is roughly the same.
62.8% saw an increase in sales and takings, and 80% believed next year would be even better.

Some more…
A new thermoelectric power plant south of Lima will create 80,000 new jobs. The power plant is the first built to take advantage of natural gas that is distributed by the Camisea project – a super pipeline project bringing natural gas from the Amazon regions to the industrial centers.

New found wealth means new investments which mean more wealth. The Government of Alan Garcia has stepped up investment everywhere it can. Recently announced new agricultural investments will generate 250,000 new jobs that will benefit approximately 450,000 families.

330,000 jobs created in one week.. that’s not bad!

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