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Peru’s Economy Maintaining Its Strength Despite The Complex Global Situation

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Peru’s Economy Maintaining Its Strength Despite The Complex Global Situation

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Supported by the commodities sector, Peru´s economy maintains macroeconomic strengths relative to other nations in Latin America. The mining sector in particular - which has significant presence in the country – had a great impact on the local economy.

Peru remains among the countries that will show better performance in the region this year. The local administration has expressed commitment with continuing deepening reforms aimed at ensuring productivity and consolidating poverty reduction.

Alonso Segura, head of the Ministry of Economy and Finance (MEF), said that while facing a complex international environment, Peru’s economy ranks above countries such as Chile, Colombia and Mexico.

“Peru’s economy is renowned internationally”, states Alejandro Werner, Director of the western hemisphere International Monetary Fund (IMF) department.

The outlook is still erratic

Despite the good news, the world’s economies -including Peru - will be affected this year by a fall in the commodity prices, growth reduction by main commercial partners and less favourable external financial conditions. Projections for 2016 show the Peruvian economy will recover helped by some potential investments, including new mining projects that will help boost production in the area.

The IMF reported that a recovery of domestic expectations is essential to consolidate the growth of internal demand. They also recommend the implementation of structural reforms and targeted public spending on infrastructure in order to boost productivity and strengthen growth potential.

However, the IMF’s World Economic Outlook report claims that Peru’s recovery will be achieved despite a slowdown in exports and investment as a consequence of the global economic deceleration.

Investors: Peru offers a favourable scenario to develop PPPs

According to the Inter-American Development Bank, Latin American and Caribbean countries offer better investment opportunities through public-private partnerships (PPP). Peru - alongside Mexico, Colombia, Chile and Brazil - is at the top of the ranking of nations with favourable scenarios to develop these PPPs.

Although Peru has presidential elections coming in 2016 and there is uneasiness regarding economic variables such as the exchange rate, I consider a great future is approaching for Peru. Challenges are big and expectations are very encouraging based on the development opportunities.

Productivity, deepening of foreign trade, promotion of private investment and the improvement of physical, social and institutional structure are essential things that need to happen. With changes of this magnitude, companies will have to adapt to a scenario where competition will be more intense. Good public policies will improve the quality of services, attract investors and create jobs.

As an investment, PPPs have become a tool to fill gaps in infrastructure in developing regions. However, there still are some financing issues and negative public accounts in some of them.

Peru has one of the best growth rates in the region and also ensures legal certainty for investors. I trust that the flow of companies interested in starting or increasing operations in Peru will remain or will grow in the coming months.

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