Economy in Peru

The U.S. Federal Government has done what has been titled as unprecedented since the era of the Great Depression. They say that “when the U.S. sneezes the rest of the world catches a cold.”
Well it seems Peru was prepared to avoid a cold. Peru is a dual currency country so to speak. The primary currencies are Nuevos Soles (PEN) and U.S. Dollars (USD) with the Euro (EUR) coming in third place.
Since the weakness of the USD us foreigners and even Peruvians have felt the squeeze. Incomes are often paid in Soles or Dollars, but this year more employees and businesses have been earning and charging in the national currency due to the weakness and devaluation of the once mighty greenback.
With the recent bailouts and nationalization of major corporate players in the States it came as a huge surprise to many that the exchange rate of the USD in Peru didn’t waiver. The joke is, “When Bush speaks the dollar falls.” It seems the joke has no truth this week.
While the U.S. economy have been shrinking the Peruvian economy has been expanding. In fact, much of Latin America has been seeing positive economic growth at astonishing rates.
CNN International reported that developing markets were able to survive this global crisis, because developing markets have more cash reserves. That’s true, especially in the case of Peru. While credit use is increasing, it is still relatively new, the majority of daily transactions are done in cash.

After spending 3 years now in Peru, My eyes were opened and I saw the dramatic difference between the two economies. Peru was more cash rich than the United States! In Peru I use cash 99% of the time, while in the United States I use cash 1% of the time. If you think about it, everything is a farce in the States, it is plastic and you never actually OWN your property or possessions. It gives the “American Dream” a whole other meaning.


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So how has Peru managed to remain relatively unaffected by this financial circus? According to a report by Agencia Andina, Peru has been able to weather out the international crisis since the country had prepared itself months before last week’s events occurred.
The Ministry of Economy and Finance had foreseen the collapse of U.S. markets and increased the Fiscal Surplus to absorb any losses.
Lima’s stock exchange had taken a temporary dive along with the other global indexes, but recovered at one of the highest rates recorded in the last years.
While tent cities are springing up across America, construction in Latin America is booming and Peru is no exception.
Fortunately, the Peruvian government has been cautious, but hopefully they will take a note from history and not repeat the same mistakes the U.S. has made as credit comes into popular use by the day.
The Peruvian economy has had its rollercoaster rides in the past going from wealthy to poor at the rate of a guano dropping, yet the past cycles are likely to be past. The rules are changing worldwide and developing countries such as Peru are becoming unlikely economic powerhouses.
The U.S. may be sneezing up a financial flu, but Peru drank its coca-tea and has stayed relatively immune for now.