ANDEAN PERU: Limits of pragmatism

Mar 1, 2014

Peru remains an investment hotspot—for now. The government hopes to double copper mining by 2016. But the country remains vulnerable to slowing Chinese demand and domestic political conflicts. By Lucien Chauvin

Two questions preoccupy any analysis of Peru’s investment prospects. Is the country’s standout growth story just getting going? Or is slowing Chinese demand for minerals like copper – coupled with domestic mining sector politics – about to bring the country back to reality?

Investment in mining in Peru reached another historic high in 2013, coming in at $8.9 billion, up 15% over the previous year, according to government figures. Meanwhile the country posted its first trade deficit in a decade: $365 million, with exports at $41.8 billion, a decline of 8.3% from the previous year, while imports were $42.2 billion, up 2.6%, according to the central bank.

The central bank expects a slight trade surplus, below $100 million, this year, growing to $1.7 billion in 2015.

Overall, Peru’s economy continues to expand at rates above global levels and is forecast to be one of...

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