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By harnessing its hydro and gas resources, Peru has developed a robust and diversified energy mix. Cheap and plentiful power is one of the key comparative advantages for the country’s mining and industrial sectors. However, falling commodity prices coupled with anti-mining protests have led to the delay of major copper and gold projects in 2016. As a result, demand for energy has not reached previously forecast levels. Several major generation projects are set to come on-line in 2016 and 2017. As such, the country faces a period of oversupply estimated to last until at least 2021. In 2016 the push to facilitate the export of electricity should open up plans for major transmission projects and provide a new source of revenue for Peru. Meanwhile, at prices under $38 a barrel, appetite for oil exploration in the country’s remote regions has dwindled. This chapter contains an interview with Luis Ortigas, Former President, Perupetro.

By any measure, Peru is a giant of the global mining industry. Only Chile and China produce more copper and the country is the world’s seventh-largest producer of gold and the third largest of silver. It is unsurprising that Peru’s economic fortunes have been tied to the mineralogy of the Andes Mountains for many centuries. The mining industry has been the driver behind the growth of the Peruvian economy for 10 years, today accounting for about 17.6% of GDP and half of exports. In the first half of 2015 Peru exported just over $9bn of metals, its weakest six-month performance since 2009. However, local miners are well placed to withstand a period of low prices, and the entrance of major new projects means 2016 should be a bumper year for production. A coherent strategy for resolving social conflicts is set to figure among the priorities of future governments. This chapter contains an interview with Rosa Maria Ortiz, Minister of Energy and Mines.

The Peruvian insurance sector has experienced a decade of strong growth, benefitting from sustained economic expansion, a significant reduction in poverty levels and a rising middle class. In the 10 years to 2013, premium income tripled, and according to the Peruvian Insurance Association, net premiums then increased by 5.36% to $3.54bn in 2014. In the first 11 months of 2015 total premiums hit $3.4bn, up by 7.6% year-on-year. In 2013 the largest source of revenue – 40.4% of net premiums – came from general insurance, followed by private pension fund life and accident cover (24.9%), general life (21.2%), and accident and health insurance (13.5%). The penetration of products remains low, meaning there is still significant room for growth. The latest estimates are that total premium income reached 1.85% of GDP in 2014, up from 1.18% in 2007, but still below levels in neighbouring countries, such as Chile. This chapter contains an interview with Daniel Schydlowsky, Former Superintendent, Superintendence of Banks, Insurance and AFPs.

The Lima Stock Exchange (Bolsa de Valores de Lima, BVL) has had a difficult three years in 2013-15, having become somewhat less active and less liquid than its peers. The market capitalisation of listed Peruvian companies was worth 38.9% of GDP in 2014, according to the latest available comparable figures from the World Bank – ahead of Mexico (37.1%) and Colombia (38.8%) but behind Chile (90.4%). However, at only 1.8% of GDP in 2014, the BVL lagged behind in terms of the total value of shares traded, compared to Colombia (5.5%), Mexico (11%) and Chile (10.5%). During 2015, the BVL’s General Index was consistently down on year-earlier levels and by September it had slumped to 10,030, a fall o 38.2% y-o-y. Nonetheless, market players believe conditions point to a recovery in 2016, as the macroeconomic environment improves and investment returns to the region, encouraged by the strength of the US dollar relative to Latin American currencies. This chapter contains an interview with Christian Laub, President, Lima Stock Exchange.

The Peruvian banking system continued to grow throughout 2015, with total bank credits rising by 15.26% year-on-year (y-o-y), to PEN250.8bn ($80bn) in September. The increase in bank credits in August 2015 reflected strong expansion in local currency lending, offset by a contraction in US dollar lending. Total outstanding local currency lending rose to PEN140.71bn ($44.9bn), at the end of August, up 35.2% y-o-y, while foreign currency lending was $23.67bn, down 18.6% y-o-y. Non-performing loans stood at 2.7%, representing an increase of 0.24 percentage points y-o-y, according to the Peruvian Banking Association. The upcoming national election, the risk of disruption because of the El Niño weather pattern and the possibility of a further slowdown in China are all factors to be monitored as potential downside risks to an otherwise solid and healthy outlook for the banking and financial sector. This chapter contains an interview with Julio Velarde, Governor, Central Reserve Bank of Peru.

In the 10 years to 2014 the Peruvian economy experienced rapid growth, averaging 6.2%, placing Peru among the fastest-growing economies in the region. In 2014 Peru was the seventh-largest economy in Latin America and Caribbean, with a GDP of $202.9bn. However, lower commodity prices and resulting lower export revenues for some of its key exports saw Peru’s growth slow considerably in 2015, to an estimated 2.5% according to the IMF. The El Niño weather pattern, which is expected to negatively affect the agriculture, fishing, trade and transport services sectors, the general elections in April, and slower demand from China are some of the challenges facing the Andean economy in 2016. Nonetheless, the IMF expects a rebound, forecasting growth of 3.3% for the year, driven primarily by increased mining activity. This chapter contains interviews with Alonso Segura, Minister of Economy and Finance; Ana Maria Carrasquilla Barrera, Chairman of the Board and Executive President, Latin American Reserves Fund; Carlos Herrera, Executive Director, ProInversión; and Dionisio Romero, President, Grupo Romero.