OECD: Peru has a resilient economy, but it has weakened in recent years

The Organization for Economic Cooperation and Development (OECD) said this Wednesday, September 27, that Peru It has an economy that is resilient to external and internal turbulence, but activity has weakened in recent years and its convergence with rich countries has stalled, according to a Reuters report.

In a report on Peru’s progress toward joining the club of rich nations, the OECD said that, after a sharp recession due to the pandemic, the local economy “rebounded quickly,” but has now slowed down due to the effects of the war between Russia and Peru. and Ukraine, and the social unrest and adverse weather in the Andean country.

“The impact of these shocks has manifested itself in inflationary pressures and the rise in prices has harshly punished many vulnerable families,” the organization stated.

The report coincides with the arrival in Lima of the general secretary of the OECDMathias Cormann, to present a first assessment of Peru in its plan to join the group and reaffirm democracy and promote a competitive economy.

Peru hopes to join the OECD in 2026

Peru, the world’s second largest producer of copper, has recorded one of the highest economic growth in Latin America in recent decades, but continues to struggle to reduce poverty and a political crisis with six presidents and three congresses in five years, in the midst of a constant power struggle.

The Government of President Dina Boluarte hopes to enter the OECD in 2026, according to the chancellery.

The OECD stated in its report that it is important for Peru to diversify its exports and move up the value chain, at a time when giant China, a major global buyer of raw materials, shows signs of economic slowdown.

“Peru’s exposure to sudden changes in the prices of copper and other minerals is another source of vulnerability,” the report said, although it added that price declines seem unlikely in the long term, because copper is an input key to the global energy transition.

The agency said that, to meet the growing demand for social services and infrastructure in Peru, Preserving fiscal sustainability, it will be necessary to improve spending efficiency and increase tax revenues.

“Structural reforms are key to boosting long-term growth” after its trade opening and strong growth, he emphasized. “However, the Peruvian economy has weakened in the last decade and the convergence with the countries of the OECD has stagnated,” he added.

Elsewhere in the report, The organization said that it is key to reduce the high informality in Peru and the “high corruption” that hinders the Government’s ability to shape its policies, collect taxes and enforce laws and regulations.

Fact:

• The OECD, currently with 38 members, began talks in January 2022 to allow Peru, along with Brazil, Argentina, Romania, Bulgaria and Croatia, to join the group.

With information from Reuters.