Strong real GDP growth and the introduction of tax reforms have strengthened Peru’s public accounts. However, the country's relatively strong fiscal position is being challenged by ongoing declines in the price of copper, a key source of government revenue. Despite a deteriorating fiscal picture, Peru’s growing middle class will make consumer-related sectors, such as retail and food & drink, increasingly attractive for investors over the medium to long term.

We keep our clients informed of the latest market moves and political developments in Peru, as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 19 of Peru’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. Our aim is to keep you ahead of the curve, so you can feel confident doing business in Peru.

Country Risk

Peru Country Risk

Peru Operational Risk Coverage (9)

Peru Operational Risk

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BMI View: Crime in Peru poses a serious security risk to potential investors, whether in terms of crimes against property, and individual, or online. Foreigners from well-developed countries present an enticing opportunity to criminals because of their perceived wealth; however, this is normally non-violent in nature and rarely life-threatening. The Shining Path terrorist group continues to pose a risk to business activity, but its capabilities have been undermined by successful security forces operations. The country enjoys a secure international position, which means that business assets are not at risk from invasion or war. Overall, Peru scores 42.4 out of 100 for Crime & Security Risk, ranking 14th in the region, between Paraguay and...

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Peru Crime & Security

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Peru scores 42.1 out of 100 for Crime and Security Risk.

Crime in Peru poses a serious security risk to potential investors, whether in terms of property crime, crime committed against an individual, or cybercrime. Foreigners from well-developed countries present an enticing opportunity to criminals because of their perceived wealth, but this is normally non-violent and rarely life-threatening. The prevalence of small gangs in larger cities, such as Lima, has contributed to an uptick in 'snatch and grab' robberies, which increases the risk to expatriates. Of equal risk to foreign workers is the rise in assaults and robberies taking place in unregistered taxis that have been collecting foreigners from airports.

Burglary, of both business and residential properties, has become more frequent, occurring mostly during the day and at weekends. Freight theft is also a growing concern in Peru, particularly for mining, oil and...

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Peru Labour Market

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BMI View: Overall, Peru is in the top tier regionally for Labour Market Risk in BMI 's Operational Risk Index, with a score of 59.6 out of 100, which places it third out of 28 countries in Latin America. Peru's rank is significantly boosted by the size and availability of the country's labour force, but depressed by a severely inadequate secondary and tertiary education system, which has diminished the country's skilled labour pool.

Peru's poor secondary and tertiary education system poses the greatest risk to investors in terms of its labour market, which is reflected in the country's relatively...

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Peru Logistics

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Peru's relatively developed logistics network is a regional outperformer in the BMI Logistics Risk Index, with an above average score of 59.2 out of 100, placing the country in 52nd place out of 170 nations globally. Within Latin America, Peru is ranked 4th out of 28 countries, behind only Panama, Chile and Mexico. An insufficient level of investment into the maintenance and development of Peru's transport networks has left the country with a low score of 46.7 out of 100 for Transport Quality, the country's worst logistics rating in BMI's index. The score places it 84 th out of 170 countries globally and 12 th out of 28 states in Latin America. However, this is likely to improve with the government planning to invest USD15bn over the next 5 years.

With the exception of the country's 8,808km of navigable waterways, Peru suffers from a substandard network of transport. The...

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Peru Trade & Investment

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Peru has a weak legal system that offers little protection for businesses and suffers from extensive bureaucracy, hindering an investor's ability to open and close a business. However Peru's strong international ties provide good trade opportunities for investors and promote the country's trade and investment score. Overall, Peru is a regional underperformer for Trade and Investment Risk in BMI's Operational Risk Index, with a score of 45.9 out of 100, which places it 16 th out of 28 countries in Latin America and 94 th out of 170 states worldwide.

Peru's weak legal environment poses the most pronounced risk to investors, which is reflected in the country's low score of 46.6 out of 100 for this indicator in our Trade and Investment Risk Index. The country's law enforcement is considered to be highly corrupt, which has led to poor protection of intellectual property and a lack of confidence in the...

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Peru Industry Coverage (19)

Agribusiness

Peru Agribusiness

Autos

Peru Autos

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2014 has proved to be a challenging year for new vehicle sales within Peru. Total new vehicle sales stood at 171,729 units for the first 11 months of the year, down by 7% year-on-year (y-o-y) according to figures from the Peruvian Association of Automotive Representatives (Araper). Breaking down the headline figure, passenger car sales were down by 1%, at 126,251 units.

Commercial vehicles (CVs) saw significant falls over 2014, against a backdrop of falling demand for Peru's key commodity exports and a slowing of economic growth. Light commercial vehicle (LCV) sales were down by 19% y-o-y over 11M14, at 28,656 units; heavy commercial vehicle (HCV) sales were down by 23% y-o-y, at 14,833 units, while bus sales were down by 21% y-o-y, at 1,989 units. This made for a total CV market of 45,478 units over 11M14.

Looking forward, BMI believes there is scope for a recovery in new vehicle sales in Peru...

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Commercial Banking

Peru Commercial Banking

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...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Consumer Electronics

Peru Consumer Electronics

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BMI View: Rising incomes, relatively low penetration rates and declining device prices regionally will combine to ensure robust medium term growth for Peru's consumer electronics market 2015-2019. Cheaper smartphones and wider availability of wireless data services will also contribute to the strong growth. Our economic growth outlook envisages middle-class incomes rising due to Peru's broad based growth in contrast to much of the rest of the region, which yields a positive outlook for demand for notebooks, tablets and flat-screen TVs. However, we caution that risks are largely weighted to the downside as weaker metals prices put pressure on the growth outlook. Delays in...

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Food & Drink

Peru Food & Drink

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BMI View: We maintain a positive longer-term view of Peru's food and drink sector, which will see strong expansion rates and present a number of interesting investment opportunities over the forecast period. Growth will be driven by a strong consumer outlook, supported by improving labour market situation and favourable crediting conditions. More generally, Peru's food and drink sector will continue to benefit from country's largely youthful population and ongoing formalisation of the mass grocery retail (MGR) segment.

Headline Industry Data (local currency)

  • Food consumption growth year-on-...

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Freight Transport

Peru Freight Transport

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BMI View: We maintain our broadly positive view on Peru's freight transport sector. External headwinds stemming from lower metals prices associated with weak Chinese demand have intensified in Peru in recent quarters, and we expect this to continue to weigh on economic growth in the coming years. A dimming global outlook towards the industrial and precious will depress fixed investment in Peru. Slowing economic growth will encourage loose monetary policies by the Banco Central del Reserva del Peru (BCRP), and combined with expansionary fiscal policies ahead of the 2016 general election, it will support relatively strong private consumption growth in 2015. However, resilience in household spending will not be enough to offset the impact of a weaker mining sector on the economy, prompting us to...

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Information Technology

Peru Information Technology

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BMI View: We have made a small downgrade to the forecast for the Peruvian IT market in Q315 to reflect a squeeze on purchasing power from expected depreciation against the US dollar. However, this has not materially affected the overall outlook and Peru is still expected to be a regional outperformer 2015-2019. The relative immaturity of the Peruvian market - with low penetration of devices in the retail market and solutions in the enterprise market - means we expect robust growth across all three IT market segments. A supportive economic...

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Infrastructure

Peru Infrastructure

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BMI View: Our 2015 construction industry forecast for Peru stands at a solid 7.1% real growth on the back of a robust project pipeline, high infrastructure demand, and strong government support for infrastructure development. Peru's construction industry will grow by an average of 5.1% over the next five years, which is lower than the double-digit growth registered over the last decade but still strong by regional standards.

A USD20.5bn budget in infrastructure investment between 2011 and 2016 has prompted strong growth in Peru's construction industry as the industry reported annual average growth of 9.5% between 2011 and 2013. High value investment plans to expand Peru's infrastructure over the next few years should continue to drive strong growth; however, cracks in the business environment cannot be ignored and may erode growth potential over the medium term.

...

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Medical Devices

Peru Medical Devices

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BMI Industry View: Peru represents the second smallest medical device market in the Americas region and has one of the lowest rates of per capita medical device spending in the region, which indicates potential for growth. With a 2013-2018 CAGR projected at around the regional average rate, the market is expected to remain significantly smaller than neighbouring Latin American countries. Lima remains the most attractive area in the private sector, as the urban population has more disposable income to spend on medical devices. Nevertheless, the private sector has seen increasing growth in other provinces as private health insurance has risen. Public hospital modernisation will also contribute to...

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Mining

Peru Mining

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BMI View: Peru's mining industry value will grow 3.4% on average per annum in 2015-2019, reaching USD27.2bn. Both domestic and international firms will continue to develop mines, encouraged by the country's strong investment and regulatory framework for miners. Still, ongoing conflicts with local communities are likely to cause project delays and other operational difficulties.

Peru's mining sector should see further growth over the next five years on account of its significant untapped reserves and open investment framework. The Peruvian government estimates that the country...

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Oil & Gas

Peru Oil & Gas

Petrochemicals

Peru Petrochemicals

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Peru has the potential to develop a competitive, world-class petrochemicals facility, but progress has been slow with upstream gas production likely to take years to develop, according to BMI's latest Peru Petrochemicals report.

With proven gas reserves of over 400bcm, by 2019 Peru should have the ability to extract 1.5bcm of ethane for use in petrochemicals production. This would support the production of a large-scale petrochemicals complex with competitively priced output that could compete with the US's new shale-based units.

We caution though, that there remain a number of above-ground risks, including opposition from the indigenous population, continued security concerns, and a cumbersome bureaucracy. The key sticking point is pipeline infrastructure and the ability to overcome the strong challenge posed by new US capacity, fed by low-cost ethane derived from shale gas.

...

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Pharmaceuticals & Healthcare

Peru Pharmaceuticals & Healthcare

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BMI View : Longstanding trade agreements with the US and EU, along with efficient regulations for quality control will continue to make Peru an appealing destination for drugmakers. However, while the pharmaceutical and healthcare markets continue to grow, the national economy continues to struggle and its dependence on key exports will hamper overall growth in the short-term.

Headline Expenditure Projections

  • Pharmaceuticals: PEN4.7bn (USD1.65bn) in 2014 to PEN5.0bn (USD1.7bn) in 2015; +6.2% in local currency terms and +2.2% in US dollar terms. Forecast has been revised upward from Q115 based on historic data.

  • Healthcare: PEN32bn (USD11.3bn) in 2014 to PEN34.2bn (...

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Power

Peru Power

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BMI View: We maintain our bright outlook for Peru's power sector and we expect total power generation to grow by an average annual rate of 4.96% between 2015 and 2024. The energy-intensive mining sector, a sound business environment and an expanding consumer base will continue to drive economic growth in Peru - and by extension fast power consumption growth. The expansion in electricity generation will be provided primarily by hydropower and thermal...

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Real Estate

Peru Real Estate

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BMI View:  Weaker economic growth is on the cards for Peru over the next few years however we expect the commercial real estate to remain resilient and record strong growth across all three sub-sectors. Private consumption, foreign investment and infrastructure spending are all on the rise, which will help bolster demand for real estate space. Existing levels of high demand combined with staggeringly low vacancy rates represent a wealth of untapped opportunities for potential developers and investors.

Demand for office space in Lima and Arequipa, the two Peruvian cities we monitor, remains very strong with increasing levels of international investment taking place. An active development pipeline is catering to this demand with the completion of many major projects expected in 2015. There is the possibility that demand may...

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Retail

Peru Retail

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BMI View: Over our forecast period (2015-2019), total household spending growth in Peru is set to accelerate, boding well for the retail sector and in turn providing ample opportunity for investment. Larger disposable incomes and a growing middle-class are key drivers behind this trend; moreover, the country's commitment to free trade looks set to ensure that Peru remains one of the most open economies for foreign investment in the region.

In 2016, we forecast that net income per household will increase by 2.3% year-on-year and that household incomes will continue to rise in an upward projection until 2019. Significantly, this is leading to the emergence of a strong middle class as the number of households...

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Shipping

Peru Shipping

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BMI maintains its positive outlook on Peru's shipping and port sector. The Peruvian economy will expand at lower rates than it has over the last five years, as weaker commodities prices weigh on the country's mining sector, which accounts for over 12.0% of GDP. A dimming global outlook towards the industrial and precious will depress fixed investment in Peru. External headwinds stemming from lower metals prices associated with weak Chinese demand have intensified in Peru in recent quarters, and we expect this to continue to weigh on economic growth in the coming years. However, private consumption and public investment will remain relatively resilient in the coming years due to a rising middle class and an extensive infrastructure project pipeline.

There are downside risks, nevertheless, with the mining sector and related industries heavily dependent on foreign investment. Underdeveloped infrastructure...

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Telecommunications

Peru Telecommunications

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BMI View : BMI believes that relatively low mobile penetration rate on the Peruvian market highlights its potential for growth. The entrance of five new operators to the mobile market - Viettel , Entel and MVNO's Virgin Mobile , AT&T and Falabella - will add to the growth of mobile market. Viettel has already made strong headway in breaking into the market in its first six months of operating. Spectrum auction, due to be held in 2015, will add impetus to developing LTE services. In the wireline sector, BMI is also bullish for growth as Azteca 's...

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Water

Peru Water

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BMI View: This quarter we have substantially adjusted our water forecasts, drawing on new data and revising our future projections. Overall, we expect demand to drive investment into the water supply sector, and increased water metering to boost revenues and reduce non-payment risks to service providers. We maintain our positive outlook with regards to infrastructure developments, owing to the need for extensive sanitation developments and additional water supply requirements. However, we note that economic issues might constrain investment.

The water sector has improved dramatically over the past few years. This has largely been due to increased investment by the state and the main water companies, better connections reducing wastewater dumping, increasing revenues, better water...

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