Peru Attempts New Economic Measures to Boost Growth
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By the end of 2014, Peru expects economic growth of around 3% according to the latest statistics. After the council of ministers authorized a stimulus package worth around $547 million in an attempt to boost the economy, the impact on GDP should be in the region of 0.25% according to the Ministry of Finance. The plan of stimulus consists of four primary themes, including:
*A set of laws to promote economic activity, cut red tape, and optimize administrative processes
*Short-term measures of fiscal stimulus
By the end of 2014, Peru expects economic growth of around 3% according to the latest statistics. After the council of ministers authorized a stimulus package worth around $547 million in an attempt to boost the economy, the impact on GDP should be in the region of 0.25% according to the Ministry of Finance. The plan of stimulus consists of four primary themes, including:
*A set of laws to promote economic activity, cut red tape, and optimize administrative processes
*Short-term measures of fiscal stimulus
*The creation of a regimen or a division to boost youth employment
*Input traffic reduction
However, it is worth noting that the president of Peru, Ollanta Humala, is also in the process of evaluating tax reforms to stimulate slower economic growth. As of yet, he has not ruled out the concept of trimming corporate tax from 20% according to the finance minister.
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The Peruvian Tax System
The finance minister, Alonso Segura reported that the government would be announcing some changes to the tax system by the conclusion of this year, alongside a new policy package for jumpstarting the economy and improves competition. Although the government has implied that there will be no lowering of the sales tax, they have not offered any specifics regarding the taxes under consideration.
Mineral Rich
Peru is the fifth biggest producer of gold in the world, as well as the third largest producer of silver and copper. As a result, the country has lined up over $57 billion worth of mining investments for the years to come. Following a mining boom that lasted for over a decade, fueled by high prices for precious minerals, the 3% growth for Peru this year may actually be optimistic according to some economists. Their government is not locking up land like America’s Department of the Interior is for fracking. Peru’s government is not holding their economy back like in America.
During 2013, the economy of Peru saw an expansion of 5.7%, and in the ten years previous, the annual average rate of GDP growth generally came in above 6%. However, today, Peru has to work harder when it comes to remaining competitive and ensuring stronger growth. At least 50% of the economy in Peru is dependent on external factors, according to Segura, and the more the global situation worsens, the more Peru’s growth is likely to decrease.
A Strong Number
The finance minister suggested that the best-case scenario for Peru was that growth would be neutral or moderately unfavorable. However, in spite of this, he suggests that the country will pull through the current economic lull and expand 6% next year.
According to Segura, capital flows in Peru are usually long-term, which provides the country with a useful edge when it comes to handling slowing growth in China and tightening monetary policy in the US. As a result, he suggests that Peru is not losing any sleep over the current economic concerns.
