Peru's economy reflects its varied geography - an arid coastal region, the Andes further inland, and tropical lands bordering Colombia and Brazil. Abundant mineral resources are found in the mountainous areas, and Peru's coastal waters provide excellent fishing grounds. However, overdependence on minerals and metals subjects the economy to fluctuations in world prices, and a lack of infrastructure deters trade and investment.
After several years of inconsistent economic performance, the Peruvian economy was one of the fastest growing in Latin America in 2002 and 2003, growing by 5% and 4%, respectively, with the exchange rate stable and an annual inflation lower than 2%.
Foreign direct investment also was strong, thanks to the ongoing Camisea natural gas pipeline project (scheduled to begin operations in 2004) and investments in gold mining.
Risk premiums on Peruvian bonds on secondary markets reached historically low levels in late 2003, reflecting investor optimism and the government's fiscal restraint. Despite the strong macroeconomic performance, political intrigue and allegations of corruption continued to swirl in 2003, with the TOLEDO administration growing increasingly unpopular, and local and foreign concern rising that the political turmoil could place the country's hard-won fiscal and financial stability at risk.
Moreover, as of late 2003, unemployment had yet to respond to the strong growth in economic activity, owing in part to rigid labor market regulations that act as an impediment to hiring.
Peruvian Econonomic numbers:
GDP: Purchasing power parity - $146 billion (2003 est.) Source: Central Reserve Bank.
Net International Reserves: US$9.181 billion (through April 28, 2002) Source: Central Reserve Bank.
Exports: US$8.954 billion f.o.b. (2003 est.). Source: Central Reserve Bank.
Imports: $8.244 billion f.o.b. (2003 est.). Source: Central Reserve Bank.
Main export products: Minerals (copper, gold, silver, lead, zinc), fishing products (mainly fishmeal), cotton, textiles. Source: Aduanas.
Direct Foreign Investment: US$10.438.42 billion (through December 31, 2001) Source: Conite.