Home to one of the seven wonders of the world, Peru is one of the biggest attractions for international tourists that venture onto South American soil. Tourism in Peru, which is divided between three distinct natural regions – coast, highlands, and jungle – has been growing steadily over the last 30 years, being worth USD3.8 billion in 2014, a massive hike from USD$521 million in 1995.
Lima was the most visited city in the region in 2011, and in 2015 5.1 million people flocked to the Peruvian capital, significantly more than visited Mexico City or São Paulo. Aside from the obvious attraction in Machu Picchu, tourists are increasingly engaging in new pursuits, ranging from ecotourism to culinary tours.
Of the population of 31 million people, 79% live in urban settings. With a young population (55% are under 30), composed of several mixed ethnicities, the Peruvian market is largely dependent on imports.
The best marketing and PR agencies in Peru have observed that consumer behavior changing over the decades, as young Peruvians earn more, and generally enjoy a better quality of life. Whereas once consumers were averse to trying new products, this is no longer the case, and Peruvians are now happy to try out new offerings, always seeking better quality, and prepared to pay a higher price for something perceived to offer this. While price is still a factor, Peruvian consumers typically look for value, rather than the cheapest price in the market.
A number multinational companies have had Peruvian bases for decades, and enjoy undisputed market dominance. Local workers are perceived to be very competitive and dedicated to their roles, allowing companies to run a tight ship, and to efficiently compete globally. If anything, international companies with a base in Peru complain that not enough is done to promote the country to foreign investors, despite several pro-business initiatives that currently exist. The fact that the market is under-explored opens great opportunity for international companies to launch new and expand existing products and services in this growing economy. Consequently, there is growing trend of international brands looking increase their footprint in Peru through sustained Public Relations and marketing communications campaigns
With an overall GDP of USD$192.1 billion in 2016, Peru’s main trading partners are the US, Brazil, China, the EU, and Chile. Export strengths can be found in textiles, chemicals, pharmaceuticals, gold, zinc, to name but a few. The service economy accounts for 59.4% of Peruvian GDP, and employs 76.1% of the active population, while mining is valued at 20% of GDP. 25.6% of the active population works in agriculture, which is worth 7.8% of GDP. Peru is the world’s largest exporter of asparagus and fishmeal. Despite having large reserves of natural gas and oil, Peru is a net importer of energy.
Education is highly regarded by Peruvian families, and it is generally accepted that education opens doors of opportunity, and will lead to personal success and advancement. While literacy rates are improving and 94.5% of population aged 15 and over can read and write, levels are disproportionately higher for men than for women.
Although classed as upper middle income by the World Bank, income disparity is an issue in Peru, as it is across the Latin American region, with one fifth of the population living below the poverty line (a quarter of children have chronic malnutrition in Peru, and 50% of under 5’s are anemic). Income gaps are closing as the economy continues to show great growth, and unemployment rates shrink. As the middle class bulges so too does demand for discretionary items and services.
Per capita GDP is around USD$6000, the highest it has ever been, and steady growth is evident, if not at the same velocity as it was a few years ago. Lower commodity prices saw growth stunt somewhat in 2015, to 2.5%. Economic dips in China in 2016 impacted Peruvian GDP growth, as did the El Nino weather pattern, which had a demonstrable impact on industries such as agriculture, fishing, trade, and transport. However, increased mining activity in the Incan nation is expected to propel further growth in the near future.
The informal economy is robust in Peru, and the government is actively trying to bring small and medium companies into officialdom, with initiatives like VAT exemptions aimed at encouraging businesses, (even PR agencies in Peru!), to register, and ultimately contribute to the economy via the tax take. Peru wants to build on its start-up culture and accelerator initiatives like Start Up Peru should help the penetration of technology companies in the market.