Peruvian Economy Overview and Opportunities for UK Exporters (2024)

Economic Overview of Peru

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GDP and Economic Growth

• GDP (2024 estimate): $232 billion USD

• GDP Growth: Peru has experienced relatively steady growth over the past decade, although impacted by the COVID-19 pandemic in 2020-21. Growth has since resumed, with recovery fueled by domestic demand, infrastructure projects, and the mining sector. The expected GDP growth for 2024 is between 2.5% and 3%, supported by a recovery in private consumption and investment.

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Key Sectors of the Economy

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1. Mining:

   • Peru is one of the world's largest producers of copper, gold, silver, zinc, and lead. The mining sector contributes around 10% to the GDP and accounts for more than 60% of Peru's total exports.

   • Significant investment in mining infrastructure continues, with new projects expected to boost the sector’s output in the coming years.

2. Agriculture:

   • Peru is a major producer and exporter of coffee, asparagus, avocados, and quinoa, among other products. This sector has grown rapidly due to the country’s diverse climates and access to international markets, especially after the signing of various free trade agreements (FTAs).

   • Agricultural exports represent 11% of Peru's export earnings.

3. Fisheries:

   • The fisheries sector is key to the economy, especially fishmeal and fish oil, where Peru is a global leader. These products are in high demand, particularly in Asia.

4. Manufacturing:

   • Manufacturing in Peru includes food processing, textiles, and chemicals. Although the sector is not as dominant as mining, it is an important driver of employment.

5. Construction and Infrastructure:

   • There is an ongoing demand for infrastructure projects such as roads, railways, ports, and airports. These are crucial to enhancing connectivity, both internally and with international markets.

   • Public and private investment in construction is a priority for economic growth.

6. Tourism:

   • While impacted by the pandemic, Peru’s tourism industry is rebounding, with top attractions like Machu Picchu, the Amazon rainforest, and the Inca Trail drawing international visitors.

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Trade Environment

• Main Export Partners: China, the United States, Switzerland, Canada, South Korea, Brazil.

• Main Import Partners: China, the United States, Brazil, Mexico, and Chile.

• Peru has multiple Free Trade Agreements (FTAs) with regions including North America, Europe, and Asia, promoting an open trade policy.

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Opportunities for UK Exporters to Peru

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Agriculture and Food Products

• Opportunities:

  • Growing demand for agricultural technologies such as irrigation systems, pest control, and sustainable farming equipment presents an excellent opportunity for UK exporters.

  • UK exporters can target the market for premium food products, including processed foods, health foods, and organic items.

• Challenges: High competition from regional exporters and the need for compliance with local food safety standards.

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Mining Equipment and Services

• Opportunities:

  • UK companies with expertise in mining technology, equipment, safety solutions, and environmental management can tap into Peru’s large-scale mining projects.

  • Services related to sustainable mining, including pollution control, waste management, and water conservation, are in demand as the government pushes for greener practices.

• Challenges: Local content regulations may require partnerships with Peruvian companies.

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Infrastructure Development

• Opportunities:

  • With Peru’s increasing demand for public infrastructure such as roads, railways, and ports, UK firms specializing in civil engineering, project management, and construction materials will find numerous projects to bid on.

  • Additionally, investment in smart cities and digital infrastructure presents opportunities for technology providers in urban development.

• Challenges: Complex procurement processes and competition from Chinese and Brazilian firms, which are already well-established in Peru.

Renewable Energy

• Opportunities:

  • Peru’s renewable energy sector, particularly solar and wind energy, has vast potential. The country aims to reduce its dependence on fossil fuels and transition to greener energy sources.

  • UK companies specializing in renewable energy technology, consultancy, and project development have opportunities to engage in this transition.

• Challenges: Initial investments can be high, and regulatory frameworks may pose hurdles.

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Financial and Professional Services

• Opportunities:

  • As Peru’s economy expands, there is a growing need for financial services such as banking, insurance, and investment advisory. UK companies with expertise in these areas can offer their services, especially in digital banking and fintech solutions.

  • Professional services, including legal, accounting, and consulting, are also in demand as international firms look to navigate Peru's regulatory and business environments.

• Challenges: Understanding local regulations and competition from established US and European firms.

Education and Training

• Opportunities:

  • The Peruvian government has prioritized education and skills development. There is significant demand for English language training, higher education partnerships, and vocational training programs.

  • UK institutions can explore partnerships with local universities or offer specialized training in sectors like technology, business, and engineering.

• Challenges: Adapting curricula to local educational needs and affordability constraints in some regions.

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Healthcare and Pharmaceuticals

• Opportunities:

  • As Peru modernizes its healthcare system, there is a rising demand for medical equipment, pharmaceutical products, and healthcare services.

  • UK exporters can target medical devices, diagnostic tools, telemedicine, and hospital management solutions.

• Challenges: High competition from US and European suppliers, as well as stringent regulatory requirements for medical products.

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UK-Peru Trade Relations

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Trade Agreement:

• The UK-Andean Trade Agreement, which includes Peru, came into force in 2021. This agreement allows for the continuation of tariff-free access to both markets for most products, promoting trade between the UK and Peru.

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UK Exports to Peru (2023) Breakdown:

• Machinery and mechanical appliances: £100 million

• Pharmaceutical products: £30 million

• Vehicles: £50 million

• Alcoholic beverages (e.g., whisky): £25 million

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Investment Climate

• The UK is already a significant investor in Peru, particularly in sectors like mining, finance, and education. The stable macroeconomic environment and investment-friendly policies make it an attractive destination for UK businesses looking to expand into Latin America.

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Market Entry Considerations

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Challenges to Entry

1. Bureaucracy: Red tape and complex regulatory processes can delay projects, particularly in the mining and infrastructure sectors.

2. Logistics: Peru’s mountainous terrain and underdeveloped transport infrastructure can pose challenges in terms of distribution and supply chain management.

3. Cultural and Language Barriers: While many business professionals speak English, fluency in Spanish is often essential for building long-term relationships.