Peru

Capital:Lima
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Peru's economy reflects its varied geography - an arid coastal region, the Andes further inland, and tropical lands bordering Colombia and Brazil. Abundant mineral resources are found in the mountainous areas, and Peru's coastal waters provide excellent fishing grounds. The Peruvian economy grew by almost 6% per year during the period 2002-06, with a stable exchange rate and low inflation. Growth jumped to nearly 9% per year in 2007 and 10% in 2008, driven by private investment and government spending, but then fell to less than 1% in 2009 in the face of the world recession, a sharp fall of private investment, and a substantial increase in counter-cyclical government spending. Growth resumed in 2010 at above 8%, due partly to a leap in private investment and continued high government spending. Peru's rapid expansion coupled with the government's conditional cash transfers and other programs have helped to reduce the national poverty rate by over 19 percentage points since 2002, though underemployment remains high. Inflation in 2010 was within the Central Bank's 1%-3% target range. Despite Peru's strong macroeconomic performance, dependence on minerals and metals exports and imported foodstuffs subjects the economy to fluctuations in world prices. Poor infrastructure hinders the spread of growth to Peru's non-coastal areas. A growing number of Peruvians are sharing in the benefits of growth but despite President GARCIA's pursuit of sound trade and macroeconomic policies, inequality persists. Nevertheless, he remains committed to Peru's free-trade path. Since 2006, Peru has signed trade deals with the United States, Canada, Singapore, China, Korea, and Japan, concluded negotiations with the European Free Trade Association (EFTA) and Chile, and begun trade talks with Central American countries and others. The US-Peru Trade Promotion Agreement (PTPA) entered into force 1 February 2009, opening the way to greater trade and investment between the two economies. Rising world prices of foodstuffs and fuel, coupled with strong domestic demand, are immediate concerns for 2011. Peru has continued to attract foreign investment. However, political disputes may impede development of some projects related to natural resource extraction.

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