Peru
Thanks to new political stability, Peru is growing faster than other countries in Latin America. (Photo by Greg M., CC 2.0)
- GDP:
- $101.5 billion
- Population:
- 28.6 million
- GDP growth rate:
- 7.5 percent
- Why it’s hot:
- In the past five years, Peru has been growing faster than most other Latin American countries, thanks to a more stable political climate and a boon in mining and agricultural exports. Peruvian incomes are rising (hitting a gross national income of $2,980, according to the World Bank), and unemployment is dropping. Citibank, McDonald’s, Motorola, Clorox, Proctor & Gamble, Chili’s Bar & Grill, Domino’s Pizza, and Marriott Hotels all have moved into the country. Peru’s fruit, vegetable, coffee, and chocolate industries are fledgling and in need of investment. Green technologies, too, may be in demand if the United States approves a free-trade agreement with Peru and asks the country to raise its environmental standards, as is expected, according to Roy Nelson, professor of international studies at Thunderbird School of Global Management in Glendale, Ariz. The country’s environmental woes include deforestation, overgrazing, air pollution, and pollution of rivers and coastal water from mining waste.
- Sectors in demand:
- The country’s growth has created an emerging middle class with a demand for TVs, refrigerators, stereos, and other consumer goods. Shopping malls are going up, replete with Starbucks and other American retailers in major cities. Thanks to Incan ruins, Peru’s tourism industry is blossoming, so tourism services — from high-end to economy-travel — are in high demand.
- Cost of doing business:
- Medium. Wages and rent can be lower in Peru than in other South American countries, but real estate prices are quickly rising. Because the country is less efficient and less developed, lost time remains a high cost of doing business. For instance, it can take up to 72 days to start a business, according to the World Bank’s “Doing Business” report . Getting goods in and out of Peru takes longer than in many countries and costs more in fees. Businesses also cite tax administration and access to finance as top barriers to investing in Peru, according to the World Bank report.
- Risk assessment:
- After years of fighting terrorist groups such as the Shining Path, Peru finally appears to be more stable, and the current government is business-friendly, lowering taxes and cracking down on corruption under a new corruption chief. Concerns remain, however, about how things will go under the country’s new president, Alan Garcia, who in the late 1980s was also the nation’s chief executive. Garcia’s government has market-friendly economic policies, a plan to boost private investments, and a plan to create 1.5 million new jobs.
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