Peru, home to Machu Picchu, the Rainbow mountains and Pisco, is a growing economy in Latin America and presents many opportunities for businesses looking to expand. In recent years Peru has experienced large economic growth due to modernization and development. The country is also one of the most stable and promising economies in the area. There are many reasons to trade in Peru, which will be explained in this blog.
1. Industry Sector
Historically Peru is well known for its mining industry and its practices has meant that it has become one of the world’s largest mining producers. It is the top producer of silver in the world, the second largest producer of copper, the fifth producer of gold and is also a key supplier of zinc and lead. The industry sector counts for around 30% of the country’s GDP and employs over 15% of the active population. Manufacturing activities also include textiles, with cotton being one of Peru’s main agricultural products. Despite the impacts of the pandemic, the mining industry largely contributed to the region’s recovery. It is therefore clear to see why Peru is an attractive area for many foreign investors.
2. International Trade
Peru trades with many countries around the world and has many free trade agreements, linking itself to over 58 countries, attracting foreign investors. Its main trading partners are China, the US, Canada, Brazil and South Korea. Nearly 95% of Peru’s exports are covered by free trade agreements, enabling Peruvian products to enter many other countries. Peru aims to position itself as a regional hub for trade between Latin America and the Asian-Pacific Economic Countries. In addition, it is part of the World Trade Organization and the Pacific Alliance. The United States-Peru Trade Promotion Agreement has meant Peru is well integrated into the US economy, with imports from the US at $9.5 billion in 2021. There are also 4 special economic zones in the country, in Tacna, Paita, and Matarani, allowing for custom free and tax free treatment for companies working in foreign trade until 2042. In 2019, Peru was also ranked 76 out of 190 countries for its ease of doing business.
3. Booming tertiary sector
The tertiary sector in Peru accounts for over 54% of GDP, which employs more than 57% of the active working population. Despite the pandemic, the tourism sector in Peru bounced back due to high vaccination rates and increased mobility. As well as having a developed tourism industry, the construction, financial services and telecommunications sectors are also well developed with backing from the government and private sector. This is advantageous for many companies looking to expand their services into the country.
Bringing your business to Peru can generate a lot of business confidence due to its stability. Peru has one of the lowest annual inflation rates in Latin America. This low inflation and high growth has led to two decades of economic stability, meaning it is one of the lowest risk countries in the region, in terms of investment.
5. Entrepreneurial spirit
Entrepreneurs in Peru are among some of the youngest in the world, with the average age being 24. In 2018, in the Global Entrepreneurship Index rankings it was ranked 67. In terms of human capital, Peru is on a mission to boost it. It has been ranked as one of the most improved nations. This improvement in developing local talent has helped to increase its economic position. Through more efforts in technology, Peru is close to the Netherlands in terms of human capital and Norway when it comes to networking. With initiatives from the government such as Innovate Peru, more than 3,400 entrepreneurial projects have been backed and financed.
If you're interested in expanding your business to Peru, get in touch.