Peru has the 39th largest economy in the world, and is one of the fastest growing economies in the world, growing by an average of 5.6% over the past five years. President Ollanta Humala has continued the economic liberalization and free market policies originally implemented by his predecessor Alan Garcia, which has resulted in significant foreign direct investment and helped to drastically reduce Peru’s poverty rate. Forecasts for the medium and long term remain very positive.
Peru’s has a stable currency and the inflation rate was the lowest in South and Central America at 1.8% in 2012, and stands at 2.5% as of 2014, below the target upper range limit of 3% set by the Central Bank. The unemployment rate has steadily fallen in recent years and as of May 2014 stands at 5.8%. The percentage of Peruvians living below the poverty line has reduced dramatically since the economic reforms of the mid-2000’s, dropping from almost 60% in 2004 to 25.8% by 2012.
Peru’s social market economy is distinguished by its levels of foreign trade. Though a diversified economy, commodity exports account for a significant portion of Peru’s economy and accounting for almost 60% of the country’s total exports. The primary exports are copper, gold, zinc, silver, textiles, fish and chemicals. Its major trading partners are China, United States, Brazil, Chile and the European Union.
43% of Peru’s US$306 billion GDP is accounted for by Services, with 32.3% accounted for by manufacturing, followed by extractive industries at 15% and taxes at 9.7%.
Peru is one of the founding members of the Andean Community of Nations, and has free trade agreements with Canada, Chile, China, Costa Rica, European Union and the European Free Trade Association, Japan, Mexico, Panama, South Korea, Thailand, the United States and Venezuela. Since the US-Peru Trade Promotion Agreement came into force in 2009, total trade between the two countries has doubled. Peru is also, along with Chile, Colombia and Mexico, a member of the Pacific Alliance, a rival to Mercosur.