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Country Commercial Guides FY 1999: Peru

 
I.  EXECUTIVE SUMMARY

This Country Commercial Guide (CCG) presents a comprehensive look
at Peru's commercial environment, using economic, political and
market analysis.  The CCG's were established by recommendation of
the U.S. Trade Promotion Coordinating Committee (TPCC), a
multi-agency task force, to consolidate various reporting
documents prepared by the U.S. government for the U.S. business
community. Country Commercial Guides are prepared annually by U.S.
embassies through the combined efforts of several U.S. government
agencies.

After a slump in growth in 1996, Peru's economic performance in
1997 was remarkable.  Gross domestic product grew 7.2% 
while inflation, which posted at only 6.5 percent, was at its
lowest level in a quarter-century.  Peru's economic recovery has
faltered slightly in 1998, however, as the continued and combined
adverse effects of the Asian crisis (which depressed metals
prices) and the El Nino weather phenomenon (which hurt the
important fishing industry) took their toll.  In 1998, gross
domestic product is expected to grow only in the 2-3 percent
range, while the inflation rate should be around 8-9 percent. 
Nevertheless, the government's stated commitment to fiscal and
economic stability remains strong, and the medium-term outlook is 
good.

Confidence in the Peruvian market stems from the program of
fiscal discipline undertaken by President Alberto Fujimori since
his first term in office (1990), which halted the hyperinflation
of the 1980s and put Peru on an unprecedented growth path, his
success in reinserting Peru into the global financial community
by committing to repay official debt to foreign creditors, and
his efforts to stem terrorist activity.  The government's resolve
will be severely tested in 1999, however, when pressures to
provide increased employment, to stimulate the economy, and to
repair El Nino-damaged infrastructure will all combine in a
pre-election year.

Uncertainty in the political arena continues, as President 
Fujimori's efforts to pave the way to run for a third term in the
year 2000 elections, questions about the role of the military,
about human rights, about press freedom, and about the
independence of the judiciary, and the continuing border dispute
with Ecuador all generate significant public debate and adverse
international attention.  Still, whatever the outcome of the
upcoming political contest, it is likely that the eventual
political leaders will not significantly change the climate
facing international investors, as there is a growing consensus
that the economic policies (import substitution, non-market) of
the past were disastrous for Peru.

Best prospect sectors include construction, mining, travel and
tourism services, pollution control equipment, electrical power
systems, oil and gas equipment, water resources equipment,
telecommunications services and equipment, computer software,
pumps, valves and compressors, environmental control services,
and architectural, construction and engineering services.

U.S. products are well-regarded in the Peruvian market and U.S.
businesses may wish to appoint local representatives to
investigate market opportunities.  Traders should use the
services of the Commercial Service (U.S. Department of Commerce)
of the Embassy to help locate an agent or distributor or to
arrange appointments during a business trip to Peru.  Call the
Commercial Service for an overall commercial briefing and the
Economic Section (U.S. Department of State) for a briefing on the
economic and financial climate, or if you are a potential or
current investor, as a part of your due diligence efforts.  Take
advantage of an Embassy briefing to give you the latest
information on this up-and-coming market in Latin America.

Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.