Republic of Peru Republica del Peru Capital: Lima By Nitish Rajbhandary - PowerPoint PPT Presentation

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Republic of Peru Republica del Peru Capital: Lima By Nitish Rajbhandary
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Republic of Peru Republica del Peru Capital: Lima By Nitish Rajbhandary

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  1. Republic of Peru • Republica del Peru • Capital: Lima By Nitish Rajbhandary

  2. General Information • Government: Constitutional Republic • President: Alan Garcia Perez • Climate: Arid and mild in coastal area, temperate to frigid in the Andes, and warm and humid in the jungle onwards. • Natural Resources: Iron ore, copper, gold, silver, zinc, lead, fish, petroleum, natural gas, and forestry. • Currency: Peruvian Nuevo Sol (PEN) • Exports: Gold, copper, fishmeal, petroleum, zinc, textiles, apparel, asparagus and coffee. • Major Markets: U.S., China, Chile, Canada, Switzerland, Japan, Spain, Netherlands. • Imports: Machinery, vehicles, processed food, petroleum, steel. • Major Suppliers: U.S., China, Brazil, Ecuador, Colombia.

  3. Characteristics • Country Area: 1,285,220 sq km (3rd largest in Latin America) • Population: 28,674,757 (July 2007 est.) (5th most populous in the region) • Population Density: 22/sq. km • Population Growth: 1.289% • Net Migration Rate: -0.99 migrant(s)/1000 population • Life expectancy: Total 70.14 / Male 68.33 /Female 72.04 • Ethnic groups: Amerindian 45%, mestizo 37 %, white 15%, black, Japanese, Chinese, and other 3% • Religions: Roman Catholic 81%,Seventh Day Adventist 1.4%, other Christian 0.7%, other 0.6%, unspecified or none 16.3%

  4. Economy GDP (PPP): $181.8 billion GDP (official exchange rate): $76.09 billion GDP (per capita): $6,400 (half of Chile) GDP Growth Rate: 6.5%/ ( 2002 – 2006 ) 5.7% GDP (by sector):agriculture: 8.5%; industry: 26.4%; services: 65% Inflation Rate: 2.1% / (2002 – 06) 1.9% Unemployment Rate: 7.2% Government Budget:revenues: $25.5 billion expenditures: $25.18 billion; including capital expenditures of $1.8 billion Debt: 33.8% of GDP Current Account Balance: $1.515 billion FDI inflows (% of GDP): 2.8

  5. Fiscal Policy • Current Account balance: ‘02 (-$1,150 m), ‘03 (-$958 m), ‘04 ($19.3m), ‘05 ($1,105 m), ‘06 ($2,456 m) • Very low tax base hence low flexibility. • Aims towards increasing tax up to 17% of GDP from current 15% by eliminating tax exemptions and altering tax code. • Tax code will be pro- contributor and pro-investor. • Cutting tariffs to encourage competition. • Increase quality of public spending by simplifying programs.

  6. Monetary Policy & Exchange Rate • Compared to other Latin countries, subdued inflation at an average of 2%. Main worry with real GDP rising. • Diversifying economy and falling debt levels. • Interest rates might increase by 25 basis points to 4.75% from 4.5% last year. • Rapid growth in spending with concentration on dollar lending a cause for long-term concern hence reserve requirement of 30% for dollars as compared to 6% for sol. • Exchange rate system is free-floating since the 90’s. • Sol expected to depreciate by 1.5% next year.

  7. Social Policies • Suffrage: 18 years; universal and compulsory until the age of 70. • Big emphasis on education. Over 30,000 schools throughout the country. • Rising crime rates and illegal narcotic industry due to penetration by the Colombians. • Plans to increase impact of social programs by emphasizing basics like food, clean water and education. • Decrease administration costs.

  8. External Relations • Border conflicts with Chile have been settled but still disputes over maritime limits in the Pacific Ocean with Chile and Bolivia. • In October 1998, Peru and Ecuador signed a peace accord to resolve border differences. • Member of the Andean community of Nations with Bolivia, Colombia, Ecuador and Venezuela (in process of leaving). • Free Trade agreements with individual Mercosur nations. • Associate member of Mercosur. • Member of Asia-Pacific Economics Cooperation (APEC) forum and also a member of UN since 1949. • Strong relations with U.S. and major trade partner. • U.S. – Peru Trade Promotion Agreement and Peru – India Trade pact in process.

  9. References • Background note: Peru. (2007). Retrieved 5/19, 2007, from http://www.state.gov/r/pa/ei/bgn/35762.htm • Historical Exchange Rate Regimes. (2000). Retrieved 5/20, 2007, from http://intl.econ.cuhk.edu.hk/exchange_rate_regime/index.php?cid=16/ • Country Study: Peru. (2005). Retrieved 5/19, 2007, from http://lcweb2.loc.gov/frd/cs/petoc.html • CIA world factbook: Peru. (2007). Retrieved 5/19, 2007, from https://www.cia.gov/library/publications/the-world-factbook/geos/pe.html • The Economist:Country Briefings: Peru (2007) Retrieved 5/19, 2007, from http://www.economist.com/countries/Peru/profile.cfm?folder=Profile-FactSheet