Like most Latin American countries, Peru is not without its own problems, but within the past decade it has seen great economic development. Thanks to successful mining industries, Peru has become a major extraction country for gold and copper.
Peru’s main trade relations lie between China and the United States. China accounts for about 17% of all of Peru’s exports, making it the biggest export partner. Peru on the other hand imports about 19% of total imports into Peru, making it the largest import partner according to the Observatory of Economic Complexity.
Despite recent gains in growth, many countries in Latin America have hit an economic flat-lining in their process of becoming more sovereign and in some cases more privatized. Some examples of this recent phenomenon are, Brasil and Argentina.
Peru has hit similar minor turmoil. The Peruvian Central Bank has reduced their original estimation of GDP growth from 4.4% to 3.1% this year, according to El Comercio, a top newspaper in Peru.
This concerns the Peruvian Central Bank, in the wake of a 5.8% growth just last year. There has been a strong deceleration, because the Peruvian economy has been hit with less demand for mineral goods. The extraction industry of mineral goods accounts for about 64% of Peru’s exportations.
This is a classic Latin example of a country dependent on the market. Although Peru has experienced such growth, it is a country that has an economy that fluctuates solely based on the demand for a small handful of goods. When those goods such as minerals aren’t in demand, the country’s worth goes down. In essence, it is the tequila effect from supply and demand.
Is the movement to privatization better? Will the country be able to become more independent and developed if it produces its own goods and doesn’t heavily rely on imports?