Economic diversification and minerals industry expansion spurs growth in Peru

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Bouncing back from political instability and hyperinflation in the 1970s and 1980s, Peru has sustained average GDP growth of 6% since 2004. A major metals and minerals exporter, Peru’s growth has been fuelled in large part by high commodity prices and stable demand from China. This has allowed the country to become an important player on the world stage in copper, gold and silver, which account for 77% all Peru’s total mining exports. Peru is also a rapidly growing producer of zinc and lead.

Economy

The expanding agriculture, fisheries and industry sectors are also pillars of the economy. Agriculture has seen much development over the past few years due to the high productivity of the flat coastline and the rapid increase in irrigated land, which has enabled Peru to become an important exporter of a selection of vegetables and fruits. The coastal climate, which allows for year-round production of otherwise seasonal products, gives Peru a competitive edge, while its marine biodiversity has placed it among the largest fishmeal and fish oil producers.

Diversification efforts by the government should serve to broaden the economy’s base in coming years. The National Diversification Plan, announced in October 2014, aims to lessen dependence on the extractive industries while strengthening key sectors such as agriculture and education. Economic growth has also been driven by Peru’s policies of trade openness. Today, Peru has free trade agreements with some of the world’s biggest players, including China, the US, the EU, and it is an active member of the Andean Community, the Asia-Pacific Economic Cooperation and the Pacific Alliance, potentially granting it access to a market of approximately 2.5bn people. The past 15 years have also seen Peru become one of the region’s main attractors of foreign direct investment, particularly in the metal extracting industries.

Sustained growth has allowed for the development of several urban centres, such as Lima, Arequipa and Cusco, while at the same time reducing poverty levels in rural areas from 59% to 24% in the past decade.

Central Government

As stated in Article 43 of the Constitution of 1994, “The Republic of Peru is democratic, social, independent and sovereign.” A constitutional republic, the Peruvian political system is composed of an executive, legislative and judicial branch. The president is the head of government and is elected for a five-year term. Though presidents can be re-elected, they cannot serve consecutive terms. The current President, Ollanta Moisés Humala Tasso, was elected in July 2011 and the next elections will be held in 2016. The Congress of the Republic of Peru exerts legislative power and has 130 members who are elected for five-year terms.

Regional Government

Following a decentralisation process initiated in 2002 and aimed at reducing dependence on the capital, Lima, Peru is divided into 24 regions and one independent province (El Callao). Regional governors are elected for four-year terms and there is no limit as to the number of consecutive re-elections. Regional elections were held in October 2014, with 14 regions going to a second round of voting in December of that year.

Geography

Peru is located on the western part of South America and borders Ecuador, Colombia, Brazil, Chile and Bolivia. Covering 1.29m sq km and with 2414 km of coastline, it is the third largest country in South America. It can be split into three geographical areas: the desert fringe running along the coast, referred to as the costa, the Andes Mountains and its outskirts, known as the sierra, and the tropical rainforest and part of the Amazon, which is called the selva.

Climate

The differences among the three geographical areas account for the appearance in Peru of 28 of the 32 existing climates in the world. In the jungle, tropically humid downpours occur year-round, while on the coast the weather is warm and dry. Lima boasts a stable temperature, with lows of around 12°C and highs of 29°C. The year is divided into two seasons: winter, which lasts from April to December; and summer, which runs from mid-December to late March. Cusco, home to Machu Picchu and the most important tourist city in the country, has a colder climate due to its higher altitude (3399m). However, daytime temperatures are usually warm at 20°C.

Population

As of June 2014, Peru’s population stood at 30.81m, according to estimates by the National Institute of Statistics (Instituto Nacional de Estadística e Informática, INEI) – an increase of 2.6m since 2007 – making Peru the fourth most populous country in South America, behind Brazil, Colombia and Argentina. Lima remains the country’s most populated region, with 8.75m inhabitants, representing roughly 28.4% of the total population. Peru’s population remains highly concentrated in the coastal region, with six out of 195 provinces accounting for more than 55% of the total population.

Language

Even though the official language is Spanish, which is spoken by more than 80% of the population, studies suggest that there are anywhere from 43 to 60 different indigenous dialects spoken today, while historically, there were an estimated 300. The most important ones are Quechua (spoken by 13% of the population) and Aymara (1.8%). Both are co-official languages in the regions where they predominate. These dialects are mainly spoken in the mountainous and jungle regions. Most businessmen have a relatively good grasp of the English language.

Religion

Though the government does not endorse an official religion, the Constitution “recognises the Catholic Church as an important element of the historical, cultural and moral formation of Peru.” According to a study by WIN-Gallup International, 86% of Peruvians believe in one of various religions, with Catholicism being the most significant at 80%. This makes Peru the ninth most religious country in the world. There are small communities belonging to other faiths, which include other Protestant denominations, Judaism, Islam, and syncretic and Amerindian religions, among others. The Constitution guarantees freedom of religious opinion and practice, which the government reinforces at various levels.

The country has a number of important religious events, such as the festival of Corpus Christi, which is celebrated 60 days after Easter Sunday, and the Lord of the Miracles month in October. Both involve statue-bearing processions. The former is particularly popular in the South-eastern city of Cuzco, while the latter is an important celebration in Lima. Major cities like Lima and Arequipa contain well-maintained colonial-era Spanish churches.

Culture & Heritage

Home to some of the world’s most ancient civilisations, and Machu Picchu, one of the new Seven Wonders of the World, Peru boasts a rich cultural and archaeological heritage that is still being studied and discovered today.

Peruvian culture has its roots in the Native American, Spanish and African cultures which were present in Peru during the colonial era, though a number of Asian and other European cultures have also left their mark. In a 2014 INEI survey, Peruvians self-identified as 52.4% mestizos (of mixed Amerindian and Spanish ancestry), 28.3% Quechua, 1% Aymara, 0.7% Amazonian, 2.8% black or “of African descent”, 6.1% white, 0.9% “other” and 7.8% “don’t know”.

The country boasts a wide range of arts and crafts, and a thriving handicraft and textile export industry. Traditional products include wooden carvings, pottery, sculpture and jewellery, much of which is influenced by the country’s Incan heritage and features complex Amerindian geometric designs and patterns.

Among most Peruvians, especially younger people, Western-style clothing is popular. However, in rural areas many indigenous people, such as Quechua Peruvians, wear traditional outfits or a mixture of indigenous and Western clothing. Traditional items include the hand-woven poncho worn by men; knitted caps with earflaps, known as chullo; and pollera, multi-layered woollen skirts or petticoats.

There are many traditional Peruvian dances. The best known is the courtship dance, the marinera, which is predominantly performed on the coast and has numerous variations. Other notable dances include alcatraz and the festejo, which originated in African slave communities, and the huayno of the Andean highlands, which originates from the Inca civilisation. Dancing is often accompanied by traditional Peruvian music. This includes Andean music, played on local instruments such as panpipes and the guitar-like charango, as well as Afro-Peruvian music, which has its roots in the African slave communities of the colonial era, and is famous for the “cajón”, an Afro-Peruvian drum. Football is very popular in Peru, as is bullfighting, with fights mostly taking place on Sundays and public holidays. The most famous bullring in the country is the 14,000-capacity Plaza de Acho, located in the Rímac district. It is the third oldest bullring in the world and dates back to 1766.

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Cover of The Report: Peru 2016

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This article is from the Country Profile chapter of The Report: Peru 2016. Explore other chapters from this report.

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