Living in Peru : your everyday companion

Living in Peru
Israel J. Ruiz

Peru's Minister of Foreign Trade and Tourism Mercedes Araoz stated that Bolivian President Evo Morales did not have the power or authority to place conditions on or boycott negotiations for a free trade pact between the European Union and Peru.

She affirmed that the Bolivian president could not make decisions for other countries despite the fact that the two nations were members of the Andean Community of Nations (CAN) - a trade bloc comprising the South American countries of Bolivia, Colombia, Ecuador and Peru.

Araoz asked Evo Morales to respect the decisions Peru made.

Peru needs to modify Andean Community Decision N° 486 to implement the free trade agreement it established with the United States.

Even though Ecuador has shown its support, Bolivian president Evo Morales responded by insulting Alan Garcia last week.

The Bolivian president then invited Garcia to La Paz to further discuss Peru's free trade deal with the U.S. and asked that President Garcia review the deal being implemented with the U.S.

Evo Morales is not aware of the benefits and positive elements a free trade agreement brings, said Peru's Labor Minister Susana Pinilla.

Peru's Minister of Foreign Affairs also publicly requested that the Bolivian president respect the decisions Peru was making.

Credit rating agency Standard & Poor’s plans to release an official report on Peru's rating in July, considering the Peruvian positive perspective and the better than expected economic results registered in the last years, said today the Sovereign Ratings director for Latin America, Sebastián Briozzo.

Peru’s current credit rating issued by Standard & Poor’s is BB+ with positive perspective, and it is really close to get the investment grade.

The country has been already awarded with the investment grade by two rating agencies, The US agency Fitch Ratings on April 2, and Dominion Bond Rating Service (DBRS) from Canada on October 19 last year.

If Standard & Poor’s improved the credit rating of Peru, it would be the third rating agency on assigning the investment grade.

Briozzo indicated the economic indicators evolution in Peru has resulted better than the one expected, in the performance level of the Gross Domestic Product (GDP), the fiscal result, and the rest of the economic accounts.

He recalled that a year ago Standard and Poor’s assigned Peru a positive perspective, and even though the agency has a time frame that can be extended up to two years for the next step, which is modifying the credit rating, “this decision could be brought forward”.

News source: ANDINA

Living in Peru
Israel J. Ruiz

After attending a university-student version of CADE, Claudio Herzka, head of the Peruvian Institute for Business Administration (IPAE) assured that Peru's youth was much more optimistic about the country's future.

CADE, an annual conference attended by Peru's top executives had its student version in May.

Instead of receiving the country's most important executives, Peru's top students attended the conference.

Herzka noted that students had a different attitude and outlook during this year's conference.

"There is a more positive vision, a long term one, a couple of years ago surveys were depressing; everyone wanted to leave the country," said the head of IPAE.

When asked about the students that attended CADE, all of which are in the top third of their university class, Herzka said, "Now they have a place in the country to do their things; they don't have to run."

He added that students were more willing to receive and accept information. "There is less aggressiveness now," said Herzka, stating that before students rejected many ideas such as the free trade deal with the U.S.

The conference has discussed and gathered information with respect to problems young people in Peru are facing.

It was reported that a summary of the conference and the conclusions made would be given to Alan Garcia's administration as well as to Congress.

Living in Peru
Israel J. Ruiz

When compared to the same month last year, formal employment in companies that have 10 or more workers increased 8.6 percent in March 2008, reported Peru's labor ministry.

Formal employment in Metropolitan Lima rose 9.3 percent, while another 20 other urban cities saw a 7.1 percent increase in people that were legally hired by companies.

The country's labor ministry reported that Chincha, a city in the region of Ica located to the south of Lima, had registered the highest increase in new jobs.

There were 26.6 percent more jobs in the southern city in March 2007 than March 2008.

With 24.6 percent more formal jobs in 2008, the city of Paita, located to the north of the country in the Piura region, registered the second highest increase in formal employment.

The cities of Huancayo (16.3%), Pucallpa (13.6%), Tarapoto (12.4%) and Arequipa (10.9%) also showed significant increases in employment.

On the other hand, jobs went down in several cities located to the north of Lima such as Chimbote (-8.6%), Sullana (-8.6%) and Talara (-1.3%).

It was reported that the increase in jobs was due to more movement at supermarkets, department stores and shopping centers.

Another factor was the sale of construction equipment and an increase in the sale of soft drinks, beer, and spare parts for heavy machinery.

More investments made by communications and transportation companies also contributed to an increase in formal employment in Peru.

Peru's Gross Domestic Product (GDP) per capita would exceed 6,000 dollars by 2011, higher than the 5,500 dollars estimated in April. In the last ten years this amount has been around 2,000 dollars, said today the minister of Economy and Finance, Luis Carranza.

He pointed out the GDP per capita would have tripled in less than a decade, which involves a substantial change in the Peruvian economy not only quantitatively but also qualitatively.

"To understand the magnitude of this growth we must imagine what would happen if counting on our expenses, and with our consumption patterns, our salary were tripled in a short time period”, he said.

He also highlighted that the private investment with respect to Gross Domestic Product (GDP) is growing significantly. In effect, it closed in 18.4 percent in 2007 and the tendency is to increase.

The private investment must reach the 23.9 percent respect to GDP in 2011, and if a four or five percent growth of the public investment is added to this percentage, the total investment would reach the 30 percent, he said.

News source: ANDINA

Living in Peru
Israel J. Ruiz


Signing free trade deals with Canada and Singapore is a clear sign that Peru is integrating itself into the world market and is now in the "big leagues", assured the country's Foreign Trade Society (COMEX).

On Tuesday, Peru's President Alan Garcia announced that the Andean country would sign free trade pacts with Canada and Singapore on Thursday May 29.

"Presently, the internal market is not what makes companies grow," said Patricia Teullet, the general manager of COMEX, explaining that the country's internal market was not enough to produce the jobs required to increase employment rates.

"Opening up to new markets implies that established companies in Peru will produce greatly and that means they will integrate themselves into the world and produce more jobs," affirmed Teullet.

Signing trade deals with Canada and Singapore will also help the county reach its goal of reducing the poverty rate to 30 percent by 2011, said Jaime Caceres, the president of the National Confederation of Private Business Associations (CONFIEP).

Earlier this week, President Garcia proudly announced the results of a national report that registered that the Andean nation's poverty rate had decreased over 5 percent.

He affirmed that the country's poverty rate would be at 10 percent by 2015.

Living in Peru
Israel J. Ruiz


Peru's president Alan Garcia praised the Andean country and its representatives on Tuesday morning, one day after it was announced that the country's poverty index had dropped more than 5 percent since 2007.

He assured that this was a sign that the country's economy was being administered well and was on the right path.

Furthermore, a proud Garcia assured that by 2015, the poverty index would be under 10 percent.

"This is good news that shows good direction and guidance as well as good social and economic models. If we keep this up poverty will decrease again in 2008 and again in 2009," affirmed the Head of State.

"My ambition goes further, and in 2015 poverty levels will be below 10 percent."

Garcia stated that the country's poverty rate had decreased 5.2 percent, explaining this meant that over 1.3 million Peruvians were no longer poor.

Moreover, to show that Peru's economy was doing better, President Garcia announced that the country would sign a free trade deal with Canada on Thursday as well as a commercial agreement with Singapore.

Peru has the lowest labor cost of the textile industry in Latin America, being listed among the 15 lowest-cost countries in the world, according to Werner International Management Consultant study, stated today Scotiabank.

Scotianbank reported that the export textile sector has important strengths, such as the quality of raw material, free access to the United States, qualified work at a low cost, proximity to the North American market and vertical integration.

In addition, Peruvian business leaders have improved their answering capabilities, which has helped to place Peru as a textile supplier in emergency situations, specialized on sending small-scale exports.

However, he stressed that the quality of most Peruvians textiles allows them to compete at premium levels in the North American market, where price is a less decisive factor.

Besides, Scotiabank reported that the Textile Committee of the National Industry Society (SNI) estimates that textile investments would reach 200 million dollars in 2008, 35 percent higher than in 2007.

The bank warned that a medium term risk is Venezuela's departure from the Andean Community (CAN).

“Venezuela is currently the second destination market for Peruvian exports, representing 400 million-dollar sales in 2007”.

After Venezuela's departure from the CAN, free access will be eliminated, however according to current Andean law, these benefits will prevail for five more years.

News source: ANDINA

The sustainable economic growth of Peru brought greater investments, more employment and better incomes, which contributed to diminish poverty, not only in the urban areas but also in the rural ones, reported today the World Bank.

The regional director of the World Bank for Bolivia, Ecuador, Peru and Venezuela, Felipe Jaramillo, said this growth is linked to the bigger investments of the last two or three years, the good economic management, a better access to foreign markets and some of Peru’s government programs.

“What we see is that there is a virtuous circle in the Peruvian economy, because is growing and it has started to create work, each time of a better quality and for the whole Peru”, he said.

The international representative also stressed on the study called “Poverty in Peru 2007”- whose results represent the sustainable economic growth of Peru during the last years.

“We think these estimates should not impress anyone since Peru has achieved a high suitable growth during the last years”, he said.

News source: ANDINA