Various institutions including the World Bank and the International Monetary Fund (IMF) consider Peru to have shone as one of the stars of the economy of Latin America in the last decade due to its rapid growth (an annual average of 5.9%), low inflation and a significant reduction in poverty. The country entered a period of prosperity not seen in the republican era since the Guano Era of the 19th century. This was due to a favorable world environment, prudent macroeconomic policies and structural reforms in various sectors of the economy.
In a final touch, the institutions of the international economic system and the expert press talked about an “economic miracle” or “economic boom” to refer to the Peruvian prosperity that the statistics showed.
Decades earlier, it was a very different story. Peru´s most recent economic crisis began in the 1980s during the populist government of the then president Alan Garcia (1985-1990), and was characterized by hyperinflation, bankruptcy, marginalization from the international community and the IMF, violence generated by Sendero Luminoso, political corruption and an attempt by the government to nationalize banks, financiers and insurance companies.
During the government of Alberto Fujimori (1990-2000) and in accordance with IMF recommendations, a controversial packet of measures known as “Fujishock” was announced to control inflation. Following economic adjustment, promulgation of the controversial 1993 Constitution drafted following the 1992 self-coup and the extra-judicial executions by the government, the state´s functions were redefined and a “market social economy” established.
A controversial privatization of state enterprises began, together with financial liberalization and the elimination of any barriers to foreign investment, permitting the country to reinsert itself in the world financial system. As a consequence, the economy grew during subsequent years, although this reduced to a minimum union activity saw an increase in informal activities. Other events unrelated to the economy included growing government authoritarianism, (Fujimori was re-elected in 1995), repression of political opposition and unprecedented acts of corruption.
Following the fall of Fujimori in 2000, three democratic governments followed: the economist Alejandro Toledo, the lawyer Alan Garcia and the former military officer, Ollanta Humala. Each maintained the same economic policy in a context of high prices for raw materials, huge foreign investment and openness to all markets. Many national economic groups grew at the same time, including the principal media operators. By 2014, Peru had totaled 15 years of continuous growth, according to the National Institute of Statistics and Information (INEI).
Nevertheless, enormous income inequality and the fiscal burden were the hidden side of the economic boom and remain the principal challenges today.
The main economic activities in Peru are: manufacturing (16.25% of GDP), mining and hydrocarbons (14-36%), trade (10.18%), and agriculture and livestock (5.97%) (INEI).