Following a crisis in the 1980s, a rigorous stabilization and restructuring program was introduced during the 1990s with comprehensive economic reforms, such as the privatization of virtually all state-owned companies, liberalization of markets, creation of a freer and safer investment climate, investment in export-led growth and wide opening. to the outside world. The result was a dramatic reduction in inflation and at times high growth rates, but also great instability and a sharp increase in unemployment and the informal sector. During the 1990s, the economy has stabilized and GDP has continued to grow. Since the mid-1990s, unemployment has also decreased slightly. It is mainly the mining industry that is the dynamic sector in the business sector, followed by construction as well as agriculture and fishing.
About half of Peru’s agricultural land is located in the Andean highlands, where cultivation of maize and potatoes for self-sufficiency dominates, but large-scale livestock farming also occurs.
Commercial and export-oriented agriculture is mainly conducted on the coast and in the rainforest area, including coffee and tea for the domestic market. On the eastern slopes of the Andes are also grown the coca bush, whose leaves are a traditional stimulant but also used for the production of cocaine. Cocoa cultivation is important for poor small farmers but varies widely; legal cultivation covers about 100,000 ha.
The restructuring policy in the 1990s meant that export crops and large farming units were favored while traditional small farms were disadvantaged. At the same time, fruits and vegetables, especially asparagus, have tended to replace Peru’s traditional export crops of sugar cane and cotton.
Peru is particularly exposed to El Niño, which causes drought in some regions and floods in others.
The eastern slopes of the Andes and the adjacent rainforest region in the east make up over 60 percent of the land area and have a huge yet unexploited timber resource.
Primarily, the forest is used as fuel, and the timber extracted goes to domestic consumption, among other things. in the form of wood for the construction industry, furniture manufacture and pulp. The timber resources in the east have as the only transport route the river system via Iquitos and further down the Amazon to the Atlantic.
From being of little significance in the early 1950s, Peru’s fishing expanded to become one of the world’s largest in 1970. Subsequently, it declined as a result of overfishing. Measures were taken to allow a recovery to occur. with a closed season. Catches are highly dependent on cold bottom water rising up to the surface, which increases food availability and attracts fish hours. The ocean phenomenon of El Niño has repeatedly disturbed this, which has led to catastrophic fishing seasons. The fishing industry is mainly dependent on anchoveta for the production of animal feed and fertilizer. In order to broaden the catch base, large quantities of sardines, shrimp and mackerel fish are now also being fished.
Peru has rich mineral resources, ties other gold, copper, zinc, silver, lead, tin and iron, and is one of the world’s leading producers and exporters of several minerals. In the early 1990s, the mining industry was in crisis, partly as a result of high tax cuts in previous decades, but the state managed to revitalize the sector by opening up for foreign investment. The mining industry contributes about 7 percent to GDP and together with the oil industry accounts for about 60 percent of the country’s export income. The industry is dominated by a few large companies, but there are also about 40 medium-sized and 500 small companies that account for 30 percent of production and a significant portion of exports. In 2002, operations began in Antamina, one of the world’s largest copper and zinc deposits.
After the stagnation of the 1980s, the oil sector also expanded during the 1990s. The former state oil sector underwent extensive privatizations during the 1990s. Oil is extracted in the northern coastal area, on the continental shelf and in the increasingly dominant eastern rainforest region. During the 1980s, large natural gas resources were discovered in eastern Peru, and in 2004 natural gas began to be extracted in the southern parts of the country.
Peru has large energy resources in the form of fossil fuels. In addition to oil, there are also large natural gas deposits in eastern and southern Peru. The southern gas fields have been linked to Lima via a pipeline across the mountain range.
The height differences of the Andes and the water-rich rivers offer the possibility of great expansion of water energy. One problem, however, is the poorly developed infrastructure, which means that about 5 million Peruvians do not have access to the electricity grid. Although only a small part of the country’s potential water energy is developed, it covers 70 percent of the country’s electricity needs.
For a long time, the mining industry is Peru’s most important industry. Primarily, copper is refined. Lead, silver, zinc and iron are usually exported as raw materials. The manufacturing industry’s share of GDP has fallen from around 20 percent in the mid-1990s to just under 15 per cent in 2015, mainly due to increased competition from abroad following liberalization of trade policy. The industry, which is concentrated in the metropolitan area, is primarily based on raw materials extracted or produced in the country, such as the refining of minerals, petroleum, agricultural products and fish.
Due to deregulation and an overvalued currency, imports gradually increased during the 1990s, leading to large trade and current account deficits. It was not until 2002 that the country – for the first time in twelve years – could show a trade surplus. Peru has subsequently had a positive trade balance. Exports are dominated by raw materials such as minerals and agricultural products. According to Countryaah, China and the United States are by far the country’s most important trading partners. On the import side, Brazil is also important and on the export side Switzerland.
Tourism and gastronomy
Peru is one of South America’s foremost tourist countries. In 2015, the country was visited by 3.5 million tourists, and tourism contributes about 10 percent to both GDP and employment. The country has several major tourist destinations such as the cities of Lima and Cuzco, the city of Machu Picchu and the highlands including Lake Titicaca.
The capital of Lima gives a contradictory impression, with stately churches and palaces from the colonial era and several internationally renowned museums with collections from the country’s rich ancient American cultures, but also with a rather declining urban environment and worn suburbs. In the area north of Lima there are remains of the ruins of the high cultures, such as Chavín de Huántar, and several of the coastal cities have interesting colonial architecture.
In the highlands, the historic heart of Peru, is the city of Cuzco 3 400 m above sea level, with churches and monasteries from the Renaissance and Baroque, in several cases on pedestals from the Inca of artificially joined boulders without masonry or joints. On the heights of the city are the Inca temples with breathtaking views of the landscape.
The big destination, however, is Machu Picchu, the rediscovered inner city with ruins of temples, palaces and residences, about 70 km northwest of Cuzco. A narrow-gauge railway leads there, but you can also hike along the inca trail, which also passes other interesting ancient sites. Hiking in these areas also provides interesting experiences of the rich bird and plant life.
From Cuzco you can also take a train across the Andean plateau to Puno and Lake Titicaca, where you can visit villages that float on the reeds off the beach. In the south is Nazca with strange giant figures and symbols commissioned as huge contours of the landscape, and in the south-east of the country lies Manú National Park with large predators, tapirs and rare birds.
Many features from Ancient American times remain in Peruvian cuisine, which usually has a fairly strong seasoning. The Inca Indians and even their predecessors cultivated a large number of different potato varieties, and the potato is still today the main ingredient in many dishes. Mixtures of a variety of ingredients are a feature of the country, the preference for thick chupes, eggs and milk products another.
The herb palillo is used extensively to give the dishes an appealing yellow color. Meat (chicken, pork or goat meat in combination with corn and potatoes) is often cooked in an oven. A specialty for the country is spit with spicy ox or calf hearts, anticucho. Along the coast there are countless varieties of ceviche, raw marinated fish with lime, onions, tomatoes and corn.
Maíz morado is a purple-colored form of corn, which is used for, among other things, desserts. Otherwise, the desserts are usually based on milk, eggs, almonds, nuts and spices. The Nougat (turrón) is famous. For food you can drink wines from the Ica region south of Lima, or also the light beer from Lima, Cuzco or Arequipa. The Indian corn beer chicha can be treacherous due to high alcohol content. The wine growers also make a grape brandy, pisco, which is an important ingredient in drinks.