The document provides an overview of Peru's current political, economic, and business climate. It notes that while Peru has experienced steady GDP growth and low inflation over the past decade, it remains one of the poorest countries in the region. The political situation is complicated and corruption has been an issue. GDP growth is projected to be 4% for 2019-2020, below what is needed to significantly reduce poverty. Doing business in Peru faces challenges such as informality and red tape, though the country remains an attractive destination for mining investment. Cultural tips for doing business in Peru include the importance of personal relationships over professional factors.

1. PERU
Professor Evodio Kaltenecker
2019
Jones Graduate School of Business
Full-time MBA Program

2. KEY FACTS AND FIGURES
● Peru has experienced a steady GDP
growth in the past decade. 6% on
average, 2% higher of the rest of the
region
● Low inflation: below 3% while the
average in the region is above 7%
● However, Peru is still one of the poorest
countries in the region
● There is room for a catch up growth if
appropriate policies are applied
● Macroeconomics polices helped in the
past and are Peruvian´s strengths
● Microeconomics policies and second
generation reforms has not been applied
yet and that is what is needed now

3. KEY FACTS AND FIGURES
● Peru has experienced a significant
reduction in Poverty
● Moreover, there has also been an
improvement on Income Distribution
(Gini Index)
● Government expenditure in Education as
% of GDP was 3% in 2000 and it was 4%
in 2017
● There is still a huge deficit in education in
Peru
● Peru is in a strong position in case of a
Financial Crisis
● International reserves as % of GDP: 30%
● Some risks is linked to China since in one
of the major trading partners

4. CURRENT POLITICAL & ECONOMIC SITUATION
● Peru is facing a complicated political situation since there has been a
permanent opposition in the congress against the President for the past years
of the current presidency
● Corruption scandals have also been an additional condiment to complicate
more the political situation – Sad stories to tell…
● Public Investment has experienced a significant reduction for the past years
● The Macroeconomic situation has not worsen but the lack of
microeconomic reforms is now having an impact in the economy
● Informality can reach 50-70% of the economy
● Space to improve red tape and education
● Infrastructure

5. CURRENT POLITICAL & ECONOMIC SITUATION
● GDP growth 2019 & 2020: 4%
● Below the 6% needed to reduce poverty
significantly and catch up the higher
income economies
● Peru is a commodity exporter and super
commodity cycle has ended
● Attractive destination for Mining
Investment
○ 13% of world copper reserves
○ 4% of world gold reserves
○ 22% of world silver reserves
● But conflicts with local communities
● Current Country Risk (March, 8th, 2019)
Country Basic Point
Argentina 777
Brasil 249
Panama 143
Uruguay 169
Peru 111

6. CURRENT POLITICAL & ECONOMIC SITUATION
● Small Open Economy
● Peru has signed more than
20 Free Trade Agreements
(FTA)
● Is one of the most open
economies in the region
● The main trading partner of
Peru are US and China,
representing more than 50%
of its exports
● A decrease in the global
trade will have an impact in
Peru
Current FTA
Under negotiation FTA
Upcoming FTA

7. DOING BUSINESS: EASE VS RANKINGS
● Peru is full of Small & Medium Enterprises (SME)
● SME are 95% of the total number of Companies
● 76% of the labor force work at SME
● SME represent 42% of GDP in Peru
● Economic Groups and local families (vertical integration)
○ Media
○ Mining
○ Agriculture
○ Others

8. DOING BUSINESS: EASE VS RANKINGS

9. DOING BUSINESS: EASE VS RANKINGS
Country Name Indicator Name 2018
Argentina Start-up procedures to register a business (number) 11
Argentina Time required to start a business (days) 11
Argentina Cost of business start-up procedures (% of GNI per capita) 5
Argentina Ease of doing business index (1=most business-friendly regulations) 119
Chile Start-up procedures to register a business (number) 7
Chile Time required to start a business (days) 6
Chile Cost of business start-up procedures (% of GNI per capita) 6
Chile Ease of doing business index (1=most business-friendly regulations) 56
Peru Start-up procedures to register a business (number) 8
Peru Time required to start a business (days) 25
Peru Cost of business start-up procedures (% of GNI per capita) 10
Peru Ease of doing business index (1=most business-friendly regulations) 68
United States Start-up procedures to register a business (number) 6
United States Time required to start a business (days) 6
United States Cost of business start-up procedures (% of GNI per capita) 1
United States Ease of doing business index (1=most business-friendly regulations) 8
Source: World Bank. Prepared by: Andres Remezzano

10. INNOVATION & ENTREPRENEURSHIP
● Most of Peruvians entrepreneurs started because they needed
○ “Emolienterias” and others
● There is a huge opportunity if you start a business that means: production in
Peru but selling in the US or Europe
● Peru oriented business are harder to start up. Localism is strong…
● There are many sectors that do not require significant amounts of
investments
○ China & India vs Peru: Smaller ticket

11. INNOVATION & ENTREPRENEURSHIP
● Succesful stories & Cases
○ Restaurants – Gastón Acurio & Barra Sullorqui
○ Education – High prices / Mathnasium / Supply vs
Demand
○ Tourism – Not only Machu Picchu
○ Clothing – Peru´s & Alpaca Clothing
○ Food (The Best) – Condiments and culinary tours
○ Health Care – Middle Class

12. CULTURAL TIPS FOR DOING BUSINESS
● Peruvians find hard to say NO. If you send a proposal and you ask about it
few days later, they will tell you: “may be tomorrow”… That is a NO
● Honesty in business or partners is hard to find in Peru
● They are hard workers compared to the rest of Latin America
● Middle Class is growing significantly
● Spend some time in Peru before you start-up
● Travel around the coast, the mountains and the jungle
● Then go back home and perform a professional market research & analyze
real business potential
● Try not to follow your instincts only
● It is easy to “fall in love with Peru”

13. CULTURAL TIPS FOR DOING BUSINESS
● Personal relationships are often more important than professional
competence and experience – “What high school did you go?”
● At the highest levels of society, marriage and relationships solidify political
and economic alliances
● Show an appreciation of the wealth of Peruvian history, art, culture and
cuisine
● Do not hesitate to contact me
● Linkedin: