Peru is a South American country bordering the Pacific Ocean, and the countries of Bolivia, Chile, Brazil, Columbia, and Ecuador.1 The land consists of the Andes Mountains, tropical forests, rivers, and peaks including the famous Maccu Picchu.1 Their rivers are mostly originating from these peaks. The Andes Mountains run parallel to the Pacific Ocean. Their Eastern lowlands contain tropical forests which are part of the Amazon basin. 1
During the Pacific War, in 1879 – 1883, Peru lost their southern territory to Chile after they were defeated.3 Peru is a major global producer of metals including Silver, Copper, and gold.2 These extractive industries have created a byproduct, being the evolving industry of Timber in Peru. 2 The United States and Peru have had a free trade agreement since 2005.3 After a 50 year border & trade dispute, an agreement with Ecuador was finally reached in 1998 to open their borders for trade and development.3
Peru’s government is called The Republic of Peru, a constitutional republic. They have a chief of state and a Head of Government, both President Pedro Pablo Kuczynski Godard. The president is elected by majority vote every 5 years.4 Besides the executive branch (President) they also have a judicial branch and a legislative branch. The judicial brand administers justice to uphold law and equal treatment of citizens, and the legislative branch passes laws & treaties and includes loans and budget duties.4 In 1993, they adopted a constitution which gave greater power to the president, and replaced a former socialist constitution.4 Peru is a member of the Andean Community (ANCOM), the Asia-Pacific Economic Cooperation (APEC), and the Trans-Pacific Partnership (TPP).4 Peru is also a member of the UN. Peru has demonstrated peaceful talks rather than aggression in regards to border control. 4
Demographically, Peru has a population of over 30.9 million people 5 consisting mostly ages 25-54 (40%) and 0-14 (27%) with a median age of 26 years and a population growth rate of 1%. 6 In terms of ethnic groups, Peru is 45% Amerindian, 37% mixed Amerindian and Caucasian, 15% Caucasian, and 3% other. 1 The population consists mostly (81%) of Roman Catholics. 1
GDP (Gross Domestic Product) is the monetary value of the goods & services produced in a country. According to World Bank as of 2015, Peru has a GDP of over $389 billion.7 This is comprised of mostly services (57%) and industry (35%) with only 7% coming from agriculture. 7 They are ranked 46/193 countries as of 2015 in terms of GDP. 7 Comparing this to neighboring countries, Peru is ahead of Bolivia (GDP of $73 billion, ranked 92/193) and of Ecuador (GDP of $183 billion, ranked 64/193). 9
GDP Per capita measures the average income per person in a country. According to World Bank as of 2015, Peru has a GDP per capita of $12,402. 7 Compare this to what we are used to in the United States ($55,837)10 and this number seems very low. Historically, Peru was a poor and unequal country. In the last 10 years, sustained economic growth has reduced poverty by over 50%, and extreme poverty by 75%. 11 It wasn’t until 2006 that the percent of the population living above the poverty line outnumbered those living below it. 11 The percent of those living above it continues to increase. 11
The disparity between the rich and poor still exists, as Peru’s rural regions are much less wealthy than the urban areas. 11 Indigenous communities lacking in education find home in Peru’s mountain highlands.11 These communities also experience cultural and language barriers with the Coastal areas of Peru. 11 As a whole, the top 20% of Peru’s population holds over half of the wealth while the bottom 60% holds around a quarter of it. 11
The total labor force in Peru was just under 17 million people as of 2014. 7 The jobs exist mostly in services (76%) with 26% of jobs being agricultural. 7 The unemployment rate in Peru is 4.2% (as of 2014). 7 This appears low when we compare to 6.2% in the United States 10 but is quite a bit higher than neighboring country Bolivia with a 2.7% unemployment rate. 8
Indigenous genres and Hispanic influence combine to create a unique culture of foods, crafts, music, and dances in Peru. They have many celebrations and festivals celebrating their culture. Their vibrant artwork is very technically skilled, dates back to ancient times, and includes weaving, wood, stone, gold, pottery, mud, wood, gourds, and silver. 12 Ancient Peruvians used animal bones, reeds, and shells to create sounds for song and dance. 12 The catholic religion has a major influence on Peruvian culture and customs.
Like every culture, there are “taboos,” or things that that you should not do because they are disrespectful. In Peru, it is rude to refuse a dinner invitation or to refuse to eat something when you are a guest. You should also avoid resting elbows on tables while eating, and resting your feet on chairs, desks, or tables. 13 Lastly, you should cross your knees at the knee, do not place one of your ankles on the other knee. 13 If you are invited into a Peruvian home, appropriate gifts include flowers, wine, or chocolate, nicely wrapped. 13
When socializing in Peru, going out for a beer at a pub or night club is popular. 13 Drinking and smoking are acceptable with a few caveats. Girls should not be openly drinking and smoking in public, and a single girl should not be out with a group of all boys. 13 Being excessively drunk is not perceived well. 13
In terms of business, Peruvians prefer the “soft sell” as opposed to conflict or confrontation in negotiations. 13 Peruvians tend to be very agreeable during conversation but this does not mean that a deal is made. 13 Highest ranking officers within companies are the decision makers. 13 The dress for work is conservative and formal, and include business suits and dresses. 13 Being on time is not as much of a priority, even in the workplace, as compared to focusing on relationships with others. 13 Peruvians value teamwork and producing quality results.
Peru’s economy focuses primarily on industries of extraction. These include mineral mining & refining, steel, metal fabrication, and the extraction and refining of petroleum. 7 Their major 3 trading partners are the United States, Canada, and China. 7 The top 3 exported goods from Peru are Ores, Precious stones & metals, and oil & mineral fuels. 7 The most important natural resources in Peru are the three metals of Copper, Silver, and Gold. Peru is a main global producer of each of these.2 A by-product of these extractive industries is the timber industry which has begun to make a rise. 2 Fishing is also a major industry in Peru. Peru ranks second (behind China) in terms of weight caught from the ocean, catching almost 10 tons of fish each year. 2 Fish meal is a major export commodity of Peru. 2
As of 2015, Peru’s total exports totaled over $33billion. Of this, China makes up the largest portion, of $7.3billion, followed by the United States ($5 billion), Switzerland ($2.6billion), and Canada ($2.3billion). 15 Other major export partners include Japan, Spain, South Korea, Brazil, Chile, and Germany. 15 The top exported good is Ores, making up $9.9 billion of their exports. Precious stones and metals make up $6billion of their exports, and oil & mineral fuels make up $2.5billion. Other major exports include Copper, Fruit & Nuts, Animal Feeds, Knit apparel, Coffee & Spice, Seafood, and Vegetables. 15
As of 2015, Peru’s total imports totaled over $38billion. 15 Their top import partner is China ($8.6billion), followed by the US ($7.8billion). 15 Other top import partners are all under $2billion and include Brazil, Mexico, Columbia, South Korea, Chile, Germany, Japan, and Ecuador. 15 The top imported goods are industrial machinery, making up $5.5billion of their imports. 15 Other top imported goods include Electrical Machinery ($4.4billion), Oil & Mineral Fuels ($3.9billion), Motor & Vehicle Parts ($3.6billion), plastics, iron & steel, cereals, pharmaceuticals, and rubber. 15
The Currency in Peru is called “Sol” and consists of coins and notes (bills). The Nuevo Sol is divided into 100 centimos, 17 much like the US Dollar is divided into 100 cents. Coins are issued in ranges from 5 centimos to 5 sol. Banknotes are issued in ranges from 10 to 200 Nuevo Sol. 17 One Nuevo Sol is currently equal to $0.30 US Dollars (as of January, 2017). 16 If we look at the inverse, this means one US Dollar equals about 3.09 in Peruvian Sol. The currency is quite stable, and has a pretty steady exchange rate with the US Dollar. 17 Most places in Peru accept the US Dollar as currency.17 There have been many forms of currency historically in Peru, with the Nuevo Sol being the most recent. 17 The Nuevo Sol has been in circulation since 1991. 17 The central bank is called the Central Reserve Bank of Peru. 16
Peru is part of two regional trade blocs, ANCOM and APEC.7 ANCOM is the Andean Community, a customs union in South America. Countries included are Bolivia, Columbia, Ecuador, and Peru. APEC is the Asia-Pacific Economic Corporation and includes many countries including Australia, Canada, United States, China, Japan, and Mexico. 18
The Legal System in Peru has many branches. First, there is the National Police of Peru, who are there to maintain and reestablish order. The police provide protection to the community, and assist individuals. 19 They also help to enforce compliance with laws, prevent crime, investigate crime, monitor borders, and combat crime.19 There is also a national commission for fighting corruption and promoting ethics who recommend national policy to prevent and combat corruption.19 Peru also has a Judiciary council, a people’s defender, office of the attorney general, and ministry of justice.19
Foreign Direct Investments, or FDI, are investments from companies or individuals in another country’s business interests. FDI net inflows were last measured in 2015 by World Bank and consisted of 3.57% of GDP. The FDI net inflows include investment to acquire at least 10% voting stock or more in an Peruvian enterprise and is the sum of equity capital, long and short term capital, and reinvestment of earnings. 20 This number has been rising, as net investment cash flows to Peru were actually negative in 1992. The leading sources of foreign investment are Spain, the UK, and the US and the leading industries are mining, communications, and finance. 21 The Peruvian government is trying to attract investors in all sectors by dropping customs barriers, opening their economy to foreign investors, and establishing a representative for current and future investors called PROinversion. 22
The driving factors in Peru’s economy are their extraction of Ores, Precious stones & metals, and oil & mineral fuels as well as their detailed work in apparel and other handmade goods.
Peru has a country risk rating of A4, which is categorized as acceptable, with a shaky political & economic outlook and a relatively volatile business environment. The business climate in particular is rated as a B, which is categorized as mediocre.23 This is due to a wide variation in the availability and reliability of corporate financial information.23 Collection of debt can be difficult in Peru. 23 Transactions between companies have risks as well because of their unstable and inefficient environments.23
Peru has many assets going for them. Much of these exist in the form of their natural resources, as discussed earlier. These include commodities such as Ores, Gold, Copper, other precious stones & metals, and oil & mineral fuels. 15 They also have many intangible assets, which can be viewed as strengths when determining whether to invest in Peru.
Peru’s has several strengths when we are looking at it from an investment point of view. First, they have a strong growth potential as a developing country. Another major strength they have, as mentioned earlier, is their membership in the Pacific Alliance which has opened up and encouraged trading with many large countries. Their natural resources, discussed earlier, such as minerals, energy opportunity, and agricultural resources are viewed as a strength as well. 23 Financially, Peru has a low public debt and a balanced budget, as well as a central bank with other sound banks. 23 Lastly, and the reason that I love Peru, is that it is attractive to tourists. 23 This is definitely a strength when we look at investment opportunities in Peru.
Peru also carries weaknesses that you should be aware of when looking into investing there. First, they have an economic dependence on commodities and on Chinese demand. 23 There are regional disparities across the country, as there is a lot of poverty in the Andean and Amazonian regions. 23 The infrastructure, healthcare, education, and corporate credit can be described as inadequate. 23 Another worrisome aspect of Peru is that they have a large scale of Cocaine production and Coca cultivation. 23 Lastly, a negative factor for trading is that the informal sector in Peru is very large (about 60% of employment) meaning businesses that are not properly licensed, paying taxes, or even recognized. 23
Investing in Peru
=Overall, I think that I would invest in Peru. Their government has been set up to support businesses, trading, and foreign investment. They have a lot of natural resources, and an amazing landscape that is very attractive to tourists. Peru also has a large GDP and is ranked as 46 in the world, despite their small size and disparity between regions.
When I am looking for things to invest in, I look for things that I think are undervalued or are going to be growing. Growth is what brings profitability to investors. Because Peru has so much growth potential and a government set up to support this growth, this looks to be a good opportunity to me. I also believe that the South American region is undervalued by American investors, which makes this a good opportunity for me.
Investing in Peru would also provide good exposure to commodities, as their current economy is very dependent on these. Peru also has much opportunity to grow outside of simply extracting commodities and start adding value in their country rather than just exporting to other countries who will add the value. Peru’s economic performance and rising middle class lead me to believe that growth and opportunity realization are going to continue to be a trend.
The easiest way you can invest in Peru is through an ETF (Exchange traded fund) which is traded on the U.S. Stock exchange and is diversified among Peruvian stocks in a single security. Investing through an ETF takes out the worry of foreign legal and tax issues. There is only one U.S traded Peruvian ETF, which has symbol EPU and is called iShares MSCI All Peru Capped Index Fund. This fund consists of 26 Peruvian equities, many of which are commodity based (ex. Copper).
Traveling Wedding, Elopement, and Brand Photographer based in Charleston, SC and Seattle, WA. Learn More!
Edit your photos in just a few clicks with the Creative Wanderer presets, focused on skintone and adventures!
Check out my eBook to learn how to choose camera gear that’s right for you, what all those numbers mean, how to shoot in manual mode or select the appropriate settings, and how to edit your photos
For those of you who want darker skin while keeping your sheets white, check out SunThetis lemongrass sunless tanning water! It goes on clear and has antiaging peptides! Be sure to check out their sunscreen pencil, the worlds first and only way to protect freckles and design on your skin.
The owner of this website, Lindsey O'Sullivan, is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking www.TheWanderlustSoul.com to Amazon properties including, but not limited to, amazon.com, endless.com, myhabit.com, smallparts.com, or amazonwireless.com.