From this month's Nobel Prize for literature to a boom in exports, these are buoyant times for Peru.
It's a stark contrast to the South American country's turbulent past, and to the economic malaise hovering over much of the developed world. While many rich countries have shifted into slow-growth mode, an IMF report this month predicts that Peru's economy will be the fastest-growing on the continent next year.
Part of the reason has been a seismic shift in Peru's trade relations. This summer, China overtook the United States as the Andean country's top export destination. China's insatiable appetite for Peru's products, from copper to fishmeal, is cushioning Peru amidst lacklustre U.S. demand.
Jose Gonzalez, a Peruvian economist and financial analyst, first wrote of the "promise of Peru" back in 1984. That promise didn't bear out in the subsequent years as the country was mired in hyperinflation and armed conflict.
"Now, we see that promise," he told an audience in Toronto last month.
He noted that when it comes to expected global growth for this year, China and India are the leaders - followed by Peru.
Peru's poverty rates are declining, and its middle class is growing. Annual inflation in South America's sixth-largest economy is 2.4 per cent and the IMF thinks it will stay low. Infrastructure projects are humming.
Given Peru's oil and gas, minerals and agribusiness, Mr. Gonzalez doesn't think it's a short-term blip. "If China's demand remains, Peru's growth will be sustainable."
It wasn't always so. In the late 1980s, annual inflation was 7,000 per cent a year. Crime rates shot up, and the Peruvian economy shut down. "It was insane. All of us became speculators, and we weren't producing anything," Mr. Gonzalez recalled in an interview last week.
Now the country is attracting a rush of foreign interest thanks to sound macroeconomic policies, low inflation and higher commodity prices. Peru's currency, the sol, has appreciated 3.4 per cent this year against the U.S. dollar, while countries including Canada are signing free-trade agreements with Lima.
Canadian companies are also boosting ties with the country. Last week, Peru's finance ministry said various public and private-sector partners are starting a $460-million (U.S.) infrastructure fund - to which Toronto-based Brookfield Asset Management will contribute $100-million. Bank of Nova Scotia has been beefing up its presence in Peru, and says it is now one of country's largest microfinance and retail banks.
On Monday, Vancouver miner First Quantum Minerals Ltd. agreed to buy Peru's Haquira copper project for $460-million (Canadian) from Ontario-based Antares Minerals.
Peru still has challenges. Nearly half its population is poor, with gaping income inequality, and the economy is vulnerable to any drop in commodity prices. Its currency has been volatile, and elections are on the horizon.
Still, it's a heartening change from a country long associated with economic hardship.
"Less than a decade ago, Peru was a dusty backwater of extreme poverty," said Walter Molano, an economist at BCP Securities, in a recent note, adding that these days, the country's international airport "brims" with Asian and European investors hungry for deals.
Now, he wrote, "Peru is morphing into a prosperous consumer society that promises to become one of the more affluent of Latin America."
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GROWTH AT A GLANCE
9.1%
Percentage growth in Peru's gross domestic product in July, year-over-year.
2.4%
Annual inflation rate as of September.
7.4%
Jobless rate.
17%
Portion of Peruvian exports that went to China in July.
16.8%
Portion of exports that went to the U.S.
1
Peru's first Nobel prize for literature, awarded to Mario Vargas Llosa this month.
Source: Staff, Bloomberg News.
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