[translations idioma=”ES” url=”https://archives.rgnn.org/2013/09/03/la-desaceleracion-economica-alcanza-a-peru/”]
PERU. It takes only a quick drive around Lima to reassure you that this city is happening. Huge construction trucks will loom over you and often block your ever-so-chaotic drive, as all sorts of new structures spring up around you. The city already harbors thirty-three malls –most of them quite new– and yet for the next three years twenty-two additional ones have been announced. Walmart, by the way, has hinted more than once at the possibility of setting shop in Peru as well. Coach, Armani, Versace and Carolina Herrera have all opened stores in the city in the last couple years. And just last week, Chanel’s has been giving out free beauty and make-up treatments to celebrate the opening of its brand new boutique.

Growth and development venture beyond the capital. Other cities in the country, such as Cuzco, Arequipa, Trujillo and Ica have experienced a rapid albeit disorderly development in past years. Many of these cities now host five-star hotels, exclusive boutiques and haute cuisine restaurants for the nearly three million tourists that come to Peru every year.

The fact is the Peruvian economy has been growing steadily for the past 13 years. It has averaged growth of 6.4% after adjusting for inflation for that period. For every percentage point the GDP has grown in the past seven years, poverty has dropped by around 0.6%. Poverty rates haven in fact fallen from 59% in 2004 to 26% last year, but that’s a tricky one because during Alan Garcia’s second presidency the measurement methodology for poverty rates was changed. In short, Garcia’s administration modified some key indicators that led to defining how much poverty there was in the country, and with that the government was able to say poverty had actually reduced much more than before. Controversy sparked from the modification, when many poverty experts questioned the move, but all in all poverty has noticeably compacted in the past couple of years. In short, as The New York Times reported earlier this week: “a remarkable period of sustained expansion has made it (Peru) on of the world’s star economies.”

The New York Times article also shines light on recent figures that indicate the country’s spectacular growth may be slowing down. Scotiabank, one of the big banks here, issued a special report last Monday releasing a new estimate of its GDP growth projections from 6.6% to 5.7% for 2013 and from 6.3% to 5.7% for 2014. According to the report, private consumption will slow down due to more moderate employment, and private investment will slip from the double-digits we have become accustomed to, growing at “only” 7% in 2014. The mining sector has been hit hard by falling commodity copper prices, which is worrisome because raw minerals account for most exports.

Recent projections such as these have led President Ollanta Humala to announce that the global financial crisis is finally reaching Peru. With the symptoms of economic deceleration starting to show, ROOSTERGNN will be initiating a series titled “Peru’s economy,” which will include debates among business owners as well as representatives of the administration and labor union. What are Peru’s primary social forces going to do to avoid a recession?