Peru

IV

Economy

Peru’s gross national product (GNP) totalled about US$65,048 million or about US$2,980 per capita in 2006 (World Bank figure). Although agriculture is still important to the economy, the manufacturing, services, mining, and fishing industries have become increasingly important. Peru relies primarily on the export of raw materials—chiefly minerals, farm products, and fishmeal—to earn foreign exchange for importing machinery and manufactured goods. During the late 1980s guerrilla violence, rampant inflation, chronic budget deficits, and drought combined to drive the country to the brink of fiscal insolvency. However, in 1990 the government imposed an austerity programme that removed price controls and ended subsidies on many basic items and allowed the inti, which was then the national currency, to float against the United States dollar. The programme also included the privatization of the mining, electricity, and telecommunications industries. Peru’s foreign debt in 1995 stood at an estimated US$30,831 million.

A

Agriculture, Forestry, and Fishing

About 1 per cent of Peru’s working population is engaged in farming (2005). Most of the coastal area is devoted to the raising of export crops; crops for local consumption are mainly grown on the montaña and the sierra. Many farms in Peru are very small and are used to produce subsistence crops; the country also has large cooperative farms. The chief agricultural products, together with the approximate yield (in tonnes) in 2006 were sugar cane (7.6 million), potatoes (3.3 million), rice (2.2 million), maize (1,230,000), seed cotton (70,000), wheat (195,000), and coffee (174,955). Peru is the world’s leading grower of coca, from which the drug cocaine is refined.

The livestock population in 2006 included about 14.8 million sheep, 5.2 million cattle, 3 million pigs, 2 million goats, 730,000 horses and mules, and 99.3 million poultry. Llamas, sheep, and vicuñas provide wool, hides, and skins.

The forests covering 55 per cent of Peru’s land area have not been significantly exploited. Forest products include balsa timber and balata gum, rubber, and a variety of medicinal plants. Notable among the latter is the cinchona plant, from which quinine is derived. The roundwood harvest in 2006 was 9.3 million cu m (326.9 million cu ft).

The fishing industry is extremely important to the country’s economy and accounts for a significant portion of Peru’s exports. It underwent a remarkable expansion after World War II; the catch in 2005 was about 9.4 million tonnes. More than three fifths of the catch is anchovies, used for making fishmeal, a product in which Peru leads the world.

B

Mining

The extractive industries figure significantly in the Peruvian economy. Peru ranks as one of the world’s leading producers of copper, silver, and lead; zinc, oil, natural gas, iron ore, molybdenum, tungsten, and gold are extracted in significant quantities. Production in 2004 included 4.3 million tonnes of iron ore; 1.21 million tones of zinc; 1,035,574 tonnes of copper; 306,211 tonnes of lead; 3,060 tonnes of silver; and 173,219 kg of gold. About 46.52 million barrels of crude petroleum were produced in 1994.

C

Manufacturing

Manufacturing in Peru is increasing. It contributed about 17 per cent of gross domestic product (GDP) in 2006. Traditional goods include textiles, clothing, food products, and handicrafts. Items produced in large modern plants include steel, refined petroleum, chemicals, processed minerals, motor vehicles, and fishmeal.

D

Tourism

The services sector of the economy contributed about 55 per cent of GDP in 2006. Tourism increased in the mid-1990s and became an increasingly important part of the services sector, bringing in about 1.64 million visitors in 2006 and US$760 million in foreign exchange. Many of the visitors come to see the remains of the pre-Inca and Inca civilizations, particularly Machu Picchu. Ecotourism is also important.