Peru is a country member of the World Trade Organization and very open to international trade, which represents 48.9% of the GDP. The country mainly exports copper (27.1%), gold (14.7%), petroleum oils (6.3%), and zinc ores (4.5%), while it imports petroleum oils (15.2%), motor vehicles (3.5%), transmission apparatus for radio-telephony (3.4%), and automatic data processing machines and units (2.1%).
Peru’s main trade partners are China, the United States, Brazil, India, South Korea, Japan, Mexico, and Ecuador. Peru’s development strategy is based on an open and competitive economy. Trade agreements are one of the government’s main targets, as these agreements are a valuable instrument for attracting FDI and boosting productivity. Nearly 95% of Peru’s exports are covered by Free Trade Agreements currently in force, which enables Peruvian products to enter, subject to the rules of origin of each trade agreement, under preferential conditions to 53 countries, including Canada, Chile, China, the member countries of the European Union, Japan, Singapore, South Korea, Thailand and the United States, among others. The country is seeking to position itself as a regional hub for trade between Latin America and the APEC countries (Asia-Pacific Economic Cooperation).
In 2018, Peru had a trade surplus of US 7.5 billion, the highest in the last five years. Merchandise exports reached USD 49 billion, mainly due to an increase in the export of fish meal, copper, gold, zinc and petroleum products. Imports also increased, totaling USD 43.2 billion. In recent years, there was a surge in mining production, as projects implemented during the previous years matured, which increased exports and offset the deceleration in domestic demand. According to the WTO, the imports of commercial services in 2018 were equal to USD 9.7 billion, greater than the exports, which were USD 7.2 billion; thus, reducing the overall trade balance.
The country’s economy relies on its natural resources. Its main source of income comes from mining; Peru is one of the largest producers of copper, gold, and zinc in the world. It has large deposits of oil and is a producer of crude petroleum and petroleum products, coffee, potatoes, mangoes, asparagus, textiles, and fishmeal.
Peru’s economy is one of the most dynamic in Latin America, but it has experienced a significant slowdown in 2009 (0.9% of growth against 9.8% in 2008), due to the effect of the drop in global trade, the price fall in raw materials and the reduction of domestic demand. Thanks to its solid base, the country proved of a strong stability facing the crisis, the government had set up counter-cyclical measures and controlled the adapted monetary means. The reestablishment was quick and strong in 2010, with an estimated growth of 8.3%, supported by the recovery of global trade, the dynamism of the domestic demand and the performance of investments.
Once the recovery started, the government began to withdraw gradually the exceptional re-launch measures and tried to contain the risks of inflation. Since then, the government has established five priorities: to stimulate growth with the support of investments, to maintain an austerity policy, to redistribute wealth, decentralization, education, and health.
Peru’s economy is classified as an upper middle- class economy by the World Bank. It’s also the 39th largest economy worldwide. Due to economic reforms that took place during the 2000s, Peru has become one of the fastest growing economies globally.
In 2011, Peru received a score of 0.752 in the HDI. The Peruvian economy is mainly strengthened by its export sector. That’s what finances the money required for imports and also to pay off the external debts of Peru.
As per the Economic Complexity Index, Peru constitutes the 59th largest export economy in the world, and also the 91st most complex economy across the globe. In the year 2014, goods worth up to 39.8 billion USD were exported from Peru. In the same year, the import of goods was calculated to be 42.3 billion USD.
Being the fifth most highly populated country in South America, Peru has shown tremendous tenacity in terms of controlling inflation as well as unemployment in the last few years.
The biggest export partners of Peru are China (34 %), the United States (11%), Switzerland (7%), South Korea (6%), and India (6%). Canada and Chile are important export partners of Peru as well. Since Peru is a nation rich in resources, it relates to both economic stability as well as social and environmental instability. With the government providing ready access to resources and the multinational operations taking place within Peru, this issue is not likely to go away anytime soon.
In the year 2016, about 33 billion USD to 38 billion USD worth of goods were shipped from Peru to different parts of the world. This made it receive the 50th place in exports among the list of countries conducting export activities.
The items that are majorly exported from Peru include ores, gems, copper, food industry waste, animal fodder, coffee, crotchet clothing/accessories, molybdenum, silver, crude petroleum, natural gas, asparagus, fruits (mangoes, avocados, bananas, citrus fruits), textiles, fishmeal, fabricated metal products, and alloys.
Important exports of Peru include:
- Lead ore
- Fruits and nuts (including grapes, mangoes, avocados, bananas and citrus fruits)
- Animal fodder and animal pellets
- Coffee (Peru is one of the world’s major coffee-producing countries)
- Vegetables (including asparagus, artichokes, paprika peppers and onions)
In the year 2017, goods worth of 38 billion USD were imported into Peru, therefore making it the world’s 54th largest importer. The main items that are imported to Peru include petroleum/petroleum products, chemicals, plastic, machinery, wheat, corn, soybean products, vehicles, TV sets, front-end loaders, telecom equipment and telephones, paper, cotton, and medicines.
A lot of Peru’s imports come in from China and the USA. Some of the other import partners include Argentina, Chile, Colombia, Ecuador, Mexico, Brazil, and Japan.
U.S.-Peru Trade Bond
In 2006, Peru and the United States signed the United States-Peru Trade Promotion Agreement (PTPA). While the agreement was ratified in June of 2006, the Protocol of Amendment took place in June 2007. In December 2007, the Agreement Implementation Act became law, and was officially implemented in February 2009.
The trade of goods and services between Peru and the United States came up to 20.1 billion USD in 2017. While the exported goods were a total of 11.3 billion USD, the imported goods were 8.8 billion USD. The goods trade surplus between U.S. and Peru was 1.8 billion USD in 2018. The services trade surplus between the U.S. and Peru came up to 1.2 billion USD in 2017.
The GDP of Peru was approximately 225.2 billion USD in 2018. The foreign direct investment (FDI) of U.S. in Peru in terms of stock was 6.4 billion USD in 2017. This direct investment is mainly dominated by mining, manufacturing, and nonbank holding companies.
Important imports of Peru include:
- Electronic equipment (including computers, TVs, telephones and telecommunications equipment)
- Iron and steel
- Cereals (wheat and corn)
- Pharmaceuticals (vaccines and medicines)
Peru has witnessed enormous economic growth lately, which has been due to economic stability, smart trade, and an increase in consumption and investment. Some of the biggest industries in Peru are that of fish processing, cement, rubber, chemicals, petroleum extraction and refining, fishing, soft drinks, furniture, textiles, and mining and refining, to name a few.
Peru’s capital, Lima, which is also its largest city, is the financial and industrial center of the country. It’s also one of the most vital financial centers in Latin America. The city accounts for over two-thirds of Peru’s industrial production. It serves as a regional destination for the cargo industry, and also has the biggest export industry in the continent as a whole.
The GDP of Peru is dominated mainly by the service industry, followed by the manufacturing and extractive industries. The United States happens to be biggest and most important trading partner of Peru, and a free-trade agreement was agreed upon between the two countries in the year 2006.
Indonesia and Peru are similar in level of economic development, they are emerging, multi-ethnic and multilingual countries, they have natural resources and were occupied by foreign countries.
Peru can learn a lot from Indonesia’s development model, as this country increasingly exports more manufactures and is part of the most important value chains in Asia.
Indonesia’s economy is 4.5 times larger than Peru’s, although its GDP per capita is only a little more than half of Peru ($ 3,789 vs. $ 7,118) and it exports five times more than Peru exports ($ 180 billion vs. $ 48 billion in 2018). It is one of the fastest growing economies in Asia and in the world (5% annually). In the world competitiveness index, it is ranked 45, while Peru is ranked 63.
Both countries are members of the Asia-Pacific Cooperation Forum (APEC), the Pacific Basin Economic Council (PBEC), the Pacific Economic Cooperation Council (PECC) and the Latin America-East Asia Cooperation Forum (FEALAC).
Peru mainly exports raw materials to Indonesia while Indonesia exports manufactured products to Peru, and traditionally Peru has a trade deficit with Indonesia.
Regarding Peruvian exports to Indonesia in 2018, the products of the agricultural sector stood out, which amounted to 22 million dollars, having a participation of 56% of the total exported, where 41% were cocoa and its derivatives and 14% were fresh grapes. Likewise, non-metallic mining stands out, which represented 25% of the total with 10 million dollars and fishing, 8% of the total represented by fishmeal with 3 million dollars. In total, Peru exported 39 million dollars to Indonesia with a variation of 11% compared to the previous year.
On the import side, Peru mainly buys consumer goods such as automobiles, footwear and clothing from Indonesia, which represented 51% of the total. Intermediate goods such as biodiesel, paper, synthetic fibers, and rubber accounted for 38%, and capital goods such as boilers, printing machines, and machine parts, accounted for 12%. In 2018, Peru imported from Indonesia an amount of 286 million dollars.
In 2019, ASEAN and Peru signed an agreement for the latter to be part of the Treaty of Amity and Cooperation in Southeast Asia (TAC) during the 52nd Meeting of ASEAN Foreign Ministers held in Bangkok, Thailand.
This is a peace treaty established between the founding member countries of ASEAN on February 24, 1976. India and China were the first countries outside of ASEAN to adhere to the TAC in 2003. Currently 38 countries are those that make up this treaty including Brazil (November 2012), Chile (September, 2016), Argentina (August, 2018), and Peru (July, 2019).
According to chapter III entitled cooperation, the contracting parties will promote active cooperation in the economic, social, technical, scientific and administrative fields to achieve international peace and stability in the region.
Pacific Alliance (PA) and the role of electronic commerce
The PA is a regional integration initiative established by Mexico, Chile, Colombia and Peru in 2011. The PA participates together in events such as fairs, seminars, business roundtables, etc. to encourage and promote trade, investment and tourism opportunities offered by its member countries.
For example, the PA through their respective embassies in Indonesia have organized seminars on trade and investment opportunities at the PA and business forums. Last year, two seminars were held in Indonesia, one in April commemorating the eighth anniversary of the creation of the Pacific Alliance and another in September entitled “Strategy to Enhance Indonesia’s Economic Diplomacy with the Pacific Alliance”.
It is also expected that a future FTA can boost trade between the two countries since, as has been seen, only cooperation agreements have been signed at a general level.
Taxes levied on imports shall depend in accordance with the classification of the Customs Tariff, and shall be established according to the information provided by the importer (invoices and other complementary information) or according to the physical inspection made by the Customs officer at the moment of clearance.
Taxes applicable to import are:
- Ad Valorem Tariff (rates of 0%, 6% and 11%, as appropriate)
- General Sales Tax (16%)
- Municipal Promotion Tax (2%)
- The following taxes could be applicable additionally and as appropriate:
- Selective Consumption Tax
- Specific Duties
- Provisional corrective Ad Valorem duties
- Anti-dumping and countervailing duties
- Domestic value added tax Pre-payment
Click here for more information on the tariff treatment applicable to goods.
Proinversión’s project portfolio aroused the interest of an increasing number of investors, motivated by the good business opportunities existing throughout the country. Within its 21 years of existence, Proinversión has carried out processes representing millions of dollars for investment.
Current projects portfolio:
International Trade Fairs:
Is the most important fair of food and beverage in Latin America, being the platform of business used as a meeting point for the key operators of distribution, retail, and specialized channel in the national and international market.
It is an event for the international market featuring the best of the Peruvian fashion and manufacturing industries. The primary goal is to promote contacts and business between the Peruvian producers and suppliers with importing companies from the five continents.
It is positioned as an event especially designed to showcase the capabilities of Peru in clothing, footwear, accessories, and jewelry.
Mining Peru Congress and Exhibition is the only international professional platform for top-level networking of key mining enterprises, regulatory authorities, government, technology and equipment suppliers, and investors across Latin America, the US, Canada, and Europe.
PERU TRAVEL MART
Peru Travel Mart is a strictly professional yearly event held in Peru since 1987. Participating businesspersons from outbound markets for priority tourism are tour operators and wholesalers interested in trading and in increasing their tourist offer of Peru.
The exhibiting companies represent Hotels, Tour Operators, Airlines, Cruises, Restaurants, Tourism Transport, and other company involved in promoting tourism in Peru. All these entrepreneurs are managers and senior executives ready for decision making and commitments in trading.
EXPO CAFE PERU
Expo Cafe Peru is the largest commercial platform in the coffee industry in Peru. It brings together the different members of the value chain in order to promote and position their services and products, as well as expand its network of business contacts.
This event brings together suppliers and experts in security, defense and disaster prevention, with official delegations, operational users, purchasing managers, research offices, researchers, investors, politicians and the media, to witness the constant evolution of technology globally.
It contributes to the modernization of the Armed Forces, Civil Defense, and National Police of Peru, with the latest advances in security, technology, cybersecurity, and disaster prevention, reinforcing the acquisition and negotiation processes.