Like so many South Americans countries, Peru is an area of the world which is relatively unknown to many people. If you ask the vast majority of people where Peru is, they may well know it is in South America but would they be able to pinpoint Peru on a map?
Therefore, it is not surprising to see that Peru is one of the many South American countries which does not yet really register on the radar of many expats. However, as with so many South American countries it is one which has changed significantly over the last 50 years and one which many believe could be an interesting growth prospect for the future. Aside from a number of Peruvian footballers making the grade in the Premiership there is relatively little in the way of exposure for Peru overseas. However, this may well be about to change!
Peru
The very fact that Peru is a Democratic Republic, divided into 25 different regions, is obviously a great start for those looking for a potential new home overseas. However, that is not to say that Peru has not experienced more than its fair share of volatility in the past although much of this has now been assigned to history. The country itself has a population of just over 29 million and a landmass which covers around 1.2m km². It is the 20th largest country by land mass in the world and as such it offers a variety of experiences, climates and landscapes.
One of the many attractions of Peru is its history which is dominated by the likes of the Inca Empire although there has been political and fiscal unrest in the country for extended periods in the past. This is a country which scores very highly on the human development index but also has a significant problem with poverty. Many of the employment options in Peru are centred round manual tasks such as fishing and mining although manufacturing and finance are also major areas of the Peruvian economy.
Where is Peru?
Peru itself is located on the west coast of South America and is bordered by the likes of Ecuador, Colombia, Brazil, Bolivia, Chile as well as the Pacific Ocean. This offers a number of potentially lucrative trade routes for Peruvian businesses and those looking to break into the Peru market. As we mentioned above, Peru is home to some of the oldest populations in the world with the Inca Empire one which immediately springs to mind.
Peru is a surprisingly large country which has very limited exposure to the Western world and one which many believe has the potential to attract significant investment, both internal and external, in the years ahead. While not in the central area of South America it does offer significant business opportunities those looking at different markets, a reduced cost base and is an interesting prospect for the future.
The weather in Peru
As we suggested above, Peru offers a very different selection of climates to that which you would normally expect in South America due to the fact it is effectively divided into three separate regions by the Andes mountain range. First we have the coastal area of Peru to the west which is a particularly arid area of the country with a number of valleys created by the various rivers which run through the region. Then we have the highlands of the Andes mountain range which house the largest peak in Peru at just over 22,000 feet above sea level. We then have the Amazonian rainforests and the jungles of the East which make up around 60% of total land mass for Peru. Peru actually has the fourth largest area of tropical forests in the world behind Brazil, Congo and Indonesia.
As we now become to expect from countries in South America and Central America the climate in Peru is not consistent and is impacted by the Andes, the ocean and the tropical area of the Amazonian jungle. The coastal region tends to experience moderate temperatures, high humidity although it can be wetter in the northern regions of the coastal area. The Andes mountain range obviously attracts a significantly lower temperature, frequent rainfall and the frozen and snowcapped peaks of the mountains. The tropical Forest region of Peru brings a totally different weather climate with heavy rainfall, high temperatures, high humidity, although there are seasonal variations in some areas with cold winters and relatively predictable rainfall.
To say that Peru offers a wide variety of climates, geography and landscapes is an understatement!
Working in Peru
Despite the fact that Peru has had more than its fair share of political and economic volatility in the past it is seen by many as one of the more attractive emerging markets and is expected to make significant strides forward in the short, medium and longer term. An improvement in the political and economic scene is attracting the attention of overseas investors and oversees expats who are now looking at the prospects for the country in more detail.
The World Bank has defined Peru has an “upper middle-income economy” which is a very good sign for the future and effectively a rubber stamping of the current governments economic and political policies. In times gone by Peru was very much a state-controlled business arena although many of the older policies and old regulations were not reversed until the late 1990s. However, there has been great movement and significant economic growth since 1993 although the country did suffer, as so many others did, in the 1997 Asian financial crisis.
The service industry now accounts for around 53% of Peruvian gross domestic product, manufacturing around 22%, extracted industries around 15% and taxes just under 10%. The country signed a free-trade agreement with the United States of America in April 2006 and many believe this could be the agreement which pushes the country onto the worldwide stage and beyond. The country is still overly dependent on exports with the likes of gold, zinc and copper, as well as textiles and fish still proving very prominent in the Peruvian economy. The list of trade partners now takes in the United States of America, China, Brazil and Chile and is expected to grow significantly in the future.
Peru is the fourth largest country by population in South America with 29.5 million inhabitants which is expected to grow to around 42 million in 2050. During the period between 1950 and 2000 there was a significant decline in the growth of the population which fell from 2.6% a year to just 1.6%. However, this has been reversed of late and Peru is most certainly a country which is on the up and attracting more and more attention from overseas as well as internal investors.
Major cities in Peru
While there is no doubt that Peru is dominated by the capital Lima, this is just one of many prominent cities in Peru which are catching the eye of tourists and investors.
Lima
Lima is situated on the west coast of Peru and is a coastal region which bodes well for the country’s major economic activity, exports. While the population of the capital itself is around 7.6 million, if you take in the surrounding regions this is nearer 9 million. It is actually the fifth largest city in Latin America behind the likes of Rio de Janeiro, Buenos Aires, São Paulo and Mexico City. The city itself has a history which goes back to the 15th century and like so many in the region there is a very strong Spanish influence.
Lima is the industrial and financial heartbeat of Peru and accounts for more than two thirds of the country’s industrial production. This is a city which continues to attract the attention of overseas investors with around 7,000 individual factories, a very liquid workforce, a cheap cost base, a well developed transport network and access to various trade markets around the world. Lima currently makes up around 45% of the gross domestic product of Peru.
Lima is also a city which is particularly strong in the financial arena and houses the Peru stock market as well as an array of overseas banking giants desperate for access to the region. Where there is a developed, or developing, financial marketplace there is no doubt that the largest financial companies in the world will follow.
Arequipa
Arequipa is the second-largest city in Peru with a population of just over 900,000 people and surprisingly the city lies within the Andes mountain range, situated just under 8,000 feet above sea level. This is a beautiful city with beautiful scenery which is dominated by Spanish architecture from years gone by. In many ways Arequipa is the capital of southern Peru and seen by many as a very important business arena for the country. Despite the fact that the capital Lima continues to dominate the GDP of Peru, Arequipa is actually seen as the fastest growing city within Latin America.
Interestingly, Arequipa offers the largest diversification of economic activity within Peru taking in administration, agriculture, commercial, financial and various industrial sectors. It is also relatively strong in the international trade arena and is very important to the future of Peru.
The cost of living in Peru
Due to the free market economy operating in Peru, the cost of relocating Peru is very different to that seen in other areas of South America such as Cuba. However, the consumer price index is roughly 41% of that in New York, the rental index is around 18%, grocery index from 48%, restaurant index around 34% and local purchasing power around 41%.
With regards to individual purchases in Peru you can expect to pay five dollars for an inexpensive restaurant meal for one, $22 for a midrange restaurant meal for two, $1.38 for a domestic beer and just over two dollars for imported beers. A bottle of Pepsi will set you back around 67c and a bottle of water around 60c. A loaf of bread costs just under two dollars, a litre of milk just under one dollar, a dozen eggs $1.28 and a kilogram of fresh cheese around $6.50. A bottle of midrange wine will set you back around eight dollars and a packet of Marlboro cigarettes around $1.74.
The country has a well developed transport network and travel by a train, taxi or car is relatively cheap. You would expect to pay around $50 a month for your utility bills, just under $40 a month for broadband with Peru mobile phone exposure even cheaper.
Conclusion
As we take a trip through Central America and South America it is becoming more and more evident that countries such as Peru have a lot more to offer than many people assume. These are areas of the world which have in many cases been left under a cloud and gained something of an unwanted reputation, and in some cases, an unwanted reputation. Peru, again like many other countries in the region, has undergone significant political and economic change of late and is now recognised as one of the fastest-growing economies in the world.
The authorities have obviously targeted overseas investment, tourism and expats as potential areas of growth in the future and areas which are vital to the ongoing development of Peru. The very fact that the country also offers three very distinct weather climates is also another positive factor as this will mean more and more people consider the region as their homeland for the future. However, poverty is still a major problem within Peru, even if the financial wealth of the country is beginning to spread into rural areas, and you will need to do your homework in relation to where you want to live.
The two largest cities in Peru account for over 50% of GDP and continue to attract the attention of major international conglomerates looking for exposure to new markets. The country offers a very convenient and they very well developed entry point into South America, and Central America, and the economy of Peru is expected to show significant growth in the future.
