The Peruvian economy has become increasingly market oriented, with major privatizations completed since 1990 in the mining, electric/power, and telecommunications industries. Thanks to strong foreign investment and the cooperation between the former Fujimori administration, the IMF, and the World Bank, growth was strong in 1994–97 and inflation was brought under control. In 1998, El Niño's impact on agriculture, the financial crisis in Asia, and instability in Brazilian markets undercut growth. 1999 was another lean year for Peru, with the aftermath of El Niño and the Asian financial crisis working its way through the economy. Lima did manage to complete negotiations for an Extended Fund Facility with the IMF in June 1999, although it subsequently had to renegotiate the targets. Pressure on spending grew in the run-up to the 2000 elections. Growth up to 2005 has been driven by construction, investment, domestic demand, and exports to different world regions. Peru's economy is one of the better-managed in Latin America. Over the next few years, the country is likely to attract both domestic and foreign investment in the tourism, agriculture, mining, construction, industry, petroleum and natural gas, and power industries.
According to The Economist, the Peruvian economy achieved the sixth largest growth worldwide in 2005. It has taken steps to consolidate a possible free trade agreement with United States of America by April 2006; both countries wait for the approval of the terms by their respective congresses. Peru is negotiating a Free Trade Agreement with Chile, Mexico and Singapur which may be finished between March and April 2006. Peru currently has a free trade agreemente with the Andean Community, which is composed of Colombia, Ecuador, Bolivia and Venezuela. It also holds free trade agreements with many of the countries in Mercosur as well as Thailand, and during the recent APEC summit, Peru voiced intentions to sign free trade agreements with China, Japan, South Korea. It is also pushing for a free trade agreement with the European Union. All these negotiations will broadly expand the markets in which the Peruvian products are traded. Peru has a great export potential in agricultural products (coffee, asparagus, paprika, artichokes, bananas, tomatoes, carrots, lettuce, tropical fruits-such as oranges, lemons, limes, papayas, pineapples, peaches, coconuts, sugar, cotton, potatoes -where it is originally from- flowers, avocadoes, olives, mangoes, apples, grapes, ethanol -byproduct of sugar cane), textiles and clothing, shoes, petroleum derivatives (gasolines, light oil, plastics, synthetic fibers, etc), natural gas, minerals (copper, gold, molibdenum, silver, zinc, plumbum, antimonium, etc), as well as fish and seafood products (oil fish, tuna, shrimp, Peruvian King crab, etc), tourism, and manufacturing (electrical and electronic equipment and machinery, automobiles, assembly parts for equipment, hydraulic pumps, ships, small aircraft, sub-assemblies, etc). In 2005 Peruvian exports reached US$ 17.1 billion (an increase of 34.6% compared to 2004) and it is expected to grow 35% for this year reaching US$23.5 billion at the end of 2006. Also, the economy has shown a healthy grow in all its sectors (energy, construction, commerce, fishing, manufacturing, tourism, etc) in 2005 growing over 6.67% (one of the fastest growth rates in the world) and it is projected to grow a strong 7% for 2006 considering that commodity prices, which Peru is a great producer, will have an estimated increment of 25% on average. Unfortunately poverty in Peru is still very high, with a rate of 51,6% of the total population, however the poverty rate is being reduced slowly and it is expected to be reduced to 25% of population in 15 years.
For the next five years (until 2010) the Peruvian government has registered over US$ 10 billion in private investment (both domestic and foreign) in the mining and energy sectors, as well as investments of US$ 15 billion in other sectors such as industry, commerce, tourism, seafood and agriculture, which will keep the economy growing at healthy levels of 5% or more, anually. It is possible that with the Free Trade Agreement with the USA these levels of investment will sky rocket developing and transforming the country in a few years.
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