Peru Overview

Peru is a large, mountainous country on the Pacific coast of South America. It has borders with Ecuador, Colombia, Brazil, Bolivia, Chile and the Pacific Ocean. The Sierra contains the Andes, with peaks of over 6000m (20,000ft). The Selva, an area of fertile, subtropical uplands, lies between the Andes and the jungles of eastern Peru. Peru offers diversity: history, archaeology, sports, beaches, mountains, medicinal springs, nature, fantastic landscapes, friendly people and music. Tumbes and Piura are the most northerly Peruvian coastal departments and are major beach, surfing, sporting and deep-sea fishing centres. Lima, the capital, is an ancient Spanish city founded by Francisco Pizarro in 1535 and known as the ‘City of Kings’. The city’s splendid museums, galleries and monuments are juxtaposed with modern suburbs. Cusco, situated 3399m (11,152ft) above sea level, was once the capital of the Inca Empire. Remains of the granite stone walls of the Inca Palace and temples can still be seen. Peru’s most famous archaeological site is Machu Picchu, the ‘Lost City of the Incas’, and the final destination of the famous three-day Inca Trail. Ceviche is a local speciality (uncooked fish marinated in lemon juice and hot pepper, served with corn-on-the-cob, potatoes and onions). There are many bars, pubs, discotheques and casinos in the major towns and tourist resorts.

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Geography

Peru is a large, mountainous country on the Pacific coast of South America. It has borders with Ecuador and Colombia to the north, Brazil and Bolivia to the east, and Chile to the south. The Pacific Ocean lies to the west. There are three natural zones, running roughly north to south: Costa (Coast), Sierra (the Highlands) and Selva (Amazonian rain forest). The Costa region, which contains Lima (the capital), is a narrow coastal plain consisting of large tracts of desert broken by fertile valleys. The cotton, sugar and rice plantations and most of the so-far exploited oil fields lie in this area. The Sierra contains the Andes, with peaks over 6000m (20,000ft), most of the country’s mineral resources (silver, zinc, lead, copper and gold) and the greater part of its livestock. The Selva, an area of fertile, subtropical uplands, lies between the Andes and the border with Brazil. Sections of a proposed international highway are at present being built through it, with some sections already in use. The Amazonian jungle has vast natural resources. The absence of land communications, however, left the area largely uncharted until full-scale oil exploration began in 1973. The population is largely Indian and Mestizo with a noticeable influence from African, Chinese and European (mainly Spanish) settlers.

Government

Republic. Gained independence from Spain in 1824, having declared it in 1821. Head of State: President Alejandro Toledo Manrique since 2001. Recent history: After the comparatively unknown independent centrist candidate, Alberto Fujimori, won the 1995 election, he contrived to stand for an unprecedented third term of office in 2000, which he also won - this time by default when his opponent, Alejandro Toledo, withdrew citing numerous irregularities.Fujimori’s triumph, such as it was, was short-lived. During his first two terms, he had relied heavily on the dubious services of his intelligence chief and principal fixer, Vladimir Montesinos. The mysterious appearance of a videotape showing Montesinos bribing an opposition Assembly member to switch sides triggered Montesinos’ fall. As investigations into his activities widened, he was found to be implicated in an extraordinary range of illegal activities, including drug trafficking, money laundering and organising death squad killings. He has since been jailed. Montesinos’ demise also meant the end for Fujimori, who was implicated in many of the same crimes. He resigned from Presidency in November 2000 and quickly left for Japan due to his dual Japanese/Peruvian nationality . Bizarrely, Fujimori now apparently believes that he can make a political comeback, possibly at the 2006 Presidential election. However, the Peruvian authorities are currently seeking his extradition from Chile, where he is currently being detained by the authorities, to Peru to face trail. Meanwhile, in April 2001, Alejandro Toledo (who had conceded to Fujimori a year earlier) won a new Presidential poll, defeating the APRA (American Popular Revolutionary Alliance) candidate, ex-President Alan Garcia. Following simultaneous National Assembly elections, Toledo’s party, the centrist Peru Posible, leads a governing six-party coalition. Toledo, the first Peruvian President of native Indian origin, has had a difficult time, largely due to the poor economic situation. In June 2002, a state of emergency was declared in the country’s second city, Arequipa, after riots broke out. In early 2003, the country was hit by a wave of major storms and floods. At the beginning of 2004, Toldeo carried out yet another Cabinet reshuffle, the seventh, sacking Peru’s first woman Prime Minister, Beatriz Merino in favour of Carlos Ferrero.

Under the new constitution introduced at the end of 1993, executive power is held by the President and legislative power by a 120-member single-chamber Assembly. Both are elected for five-year terms.

Climate

Varies according to area. On the coast winter lasts from June to September. During this period, the mountainous areas are often sunny during the day but cold at night. Heavy rains in the mountains and jungle last from December to April. It never rains in Lima nor most of the coast, except for Tumbes and Piura, which have tropical climates.

Economy

GDP: US$68.4 billion (2004).
Main exports: Copper, gold, zinc, crude petroleum and petroleum products and coffee.
Main imports: Petroleum and petroleum products, plastics, machinery, vehicles, iron and steel, wheat and paper.
Main trade partners: USA, Chile, China, Spain, UK, Brazil, Colombia and Japan.

The Peruvian economy is divided into two distinct parts: a relatively modern industrial and service economy concentrated on the coastal plain, and a subsistence agricultural economy in the interior. Inevitably, one consequence has been huge migration from the interior to the coastal cities. About one-third of the workforce is engaged in agriculture, producing rice, maize and potatoes for domestic consumption and coffee as the principal cash crop. There is also a substantial illicit economy based on the production of coca (which has grown recently due to the collapse of world coffee prices). Fisheries are also important, and provide substantial export income. Much of the foreign investment of the early 1990s was directed towards Peru’s major industry, mining, which accounts for about half of export earnings. Peru is a major producer of copper; in addition, there are sizeable deposits of lead, zinc, silver, gold, and some oil reserves. Manufacturing is concentrated in processed foods, chemicals, metal products, machinery and textiles. In the service sector, tourism has grown considerably during the last two decades, and now brings in almost US$1 billion annually.

During the early- to mid-1990s, Peru implemented important market-oriented reforms, including a drastic overhaul of the fiscal and monetary systems, privatisation of key industries (mining, telecommunications and energy), trade deregulation and measures to attract investment from abroad. The strategy was reasonably successful, boosting exports and government tax revenues while attracting foreign capital. The defeat of the Sendero Luminoso insurgency also served to boost investor confidence. Throughout most of the decade, Peru was among the most dynamic economies in Latin America, with an average annual GDP growth of around 5 per cent. The economy stalled in 1997 – affected by the Asian and Brazilian financial crises, the effects of El Nino (especially upon agriculture) and internal politics – but has since recovered. The official unemployment rate is 9.5 per cent, but it is estimated that up to 40 per cent of the workforce are underemployed. During 2004, annual growth 4.5 per cent. The inflation rate is 4.3 per cent.

Peru is a member of the Andean Treaty and the Latin American Integration Association, ALADI, which promotes trade and economic development in Latin America. Significant new investment opportunities remain in Peru and with the growth of gas production, rising domestic consumption, increasing exports together with the prospect of a free trade agreement with the US, Peru's economy appears to be set on a path of sustainable and stable growth.