Peru, like every other country, did not escape the COVID-19 pandemic unscathed; however, it is faring quite well in relation to the global economic ramifications of the pandemic. After the initial shock to Peru’s economy induced by COVID-19, the GDP growth is projected at 4.1% over 2022-2030. While the GDP growth is predicted to fall slightly over the following decade, it is still projected to average 3.1%.
There are several factors that contribute to Peru’s ability to grow its economy in the coming years. Peru benefits from several free-trade agreements with the U.S. and China and trade alliances with Chile, Colombia, and Mexico. The Peruvian economy is heavily reliant on exported goods. The U.S. is Peru’s main market for non-traditional exports, while China is the recipient of the largest amount of total exported goods. Meanwhile, Peru’s trade alliance with other South American and Central American countries has gained momentum in recent years increasing trade in goods and services, capital, and free movement of citizens.
The dynamic growth of Peru’s export-focused sectors of the economy, including agriculture and mining, over the last two decades have been a catalyst for Peru to reach the Latin American median GDP. Peru is abundant in natural resources including metals, natural gas, and rich soil; therefore, future economic growth is likely to switch focus to natural resource intensive sectors, agriculture exports, and specialized manufacturing such as textiles.
Although Peru has drastically developed its economy over the last couple decades, it remains reliant on exports and susceptible to external market fluctuations in demand and commodity prices. Peru has a multitude of opportunities to expand its economy further, but its ability to grow is largely dependent on the strengthening of education, capital investments, and institutions within the country. Without reform in these areas, Peruvian economic growth is likely to stagger, making it crucial to address the internal issues in order to propel forward.
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