Latin American Economic Outlook 2022

Peru

1. Recent trends

Poverty in Peru increased in recent years, from 19.1% in 2016 to 28.4% in 2020, partly owing to the impact of the COVID-19 pandemic. As a result, it is now above the Latin America and the Caribbean (LAC) average of 26.3%. Extreme poverty also increased in that period from 5.2% to 8.6% and was on par with the LAC average (8.7%). The population living in completely informal households decreased from 67.9% in 2010 to 51.6% in 2018 but remained well above the LAC average of 36.3% in 2018. Regarding environmental indicators, in 2019, greenhouse gas (GHG) emissions per capita were 3.1 tonnes of carbon dioxide equivalent (t CO₂e), lower than the averages for LAC (6.3) and for countries belonging to the Organisation for Economic Co-operation and Development (OECD) (9.1). That year, the share of the population exposed to air pollution levels that pose risks to human health (PM2.5 at more than 10 µg/m³) was 98.4%, higher than 95.4% for LAC and 61.0% for the OECD. The marine protected area of Peru accounted for just 0.5% of its territorial waters in 2021, lower than averages for LAC (7.3%) and the OECD (18.6%). In June 2021, the government signed a decree that establishes the protected marine area of the Nazca Ridge National Reserve to 62 392 km², thereby increasing the national marine protected area to almost 8% of territorial waters. On the fiscal side, environmentally related tax revenue was 0.5% of gross domestic product (GDP) in 2020, below LAC (1.0%) and the OECD (2.1%). Total tax revenues as a percentage of GDP in 2020 (15.2%) remained lower than the averages for LAC (21.9%) and the OECD (33.5%).

2. Long-term development policies for a green transition

Peru’s National Strategy on Climate Change to 2050, recently updated, defines action on climate change in an integrated, cross-cutting and multi-sectoral manner. The National Environmental Policy 2030 aims to decrease the vulnerability of ecosystems, preserve biodiversity, contribute to the sustainable management of nature, and achieve a 64% renewable energy matrix by 2030. The National Plan of Competitiveness and Productivity 2019-2030 promotes sustainable economic growth and international trade, prioritising environmental sustainability.

Within Peru’s mitigation efforts, the Ministry of Environment (MINAM) is executing the Construyendo bienestar humano y resiliencia en bosques amazónicos project (2019), financed by the Global Environment Facility (GEF), to preserve Amazon ecosystems. The MINAM is also leading a project with the NAMA (Nationally Appropriate Mitigation Actions) Facility for management of organic wastes. The Mejora de la sostenibilidad en la movilidad eléctrica para el transporte urbano project aims to enhance electric transport initiatives to reduce pollutants and improve air quality. Regarding Peru’s adaptation measures, a National Adaptation Plan has been adopted in 2021.

Regarding international partnerships, within the region, Brazil, Colombia, Ecuador and Peru are collaborating on the integrated management of the Putumayo-Ica river basin, with the World Bank as implementer. The Pacific Alliance leads a project to promote the circular economy and sustainable management of plastics in Chile, Colombia, Mexico and Peru. The AICCA-Peru (Adapting irrigation to climate change) project, in partnership with Bolivia, Colombia and Ecuador, aims to strengthen adaptation measures in irrigation system projects. Beyond LAC, Peru has various projects with the GEF to preserve the Amazon including: Sustainable Productive Landscapes in the Peruvian Amazon; Securing the Future of Peru’s Natural Protected Areas; Sustainable Industrial Zone Development in Peru; and Deforestation Free Commodity Supply Chains in the Peruvian Amazon. As a member of the Climate and Clean Air Coalition, Peru received technical assistance to scale up municipal projects in solid wastes. In 2022, the Amazon Cooperation Treaty Organization began creating a regional platform for indigenous people in the Amazon as part of Pacto de Leticia por la Amazonía, implemented with support from EUROCLIMA+.

Concerning green finance, the Green Finance Roadmap incorporates environmental guidelines in the management of the financial system, insurance sector and the stock market to increase access to green funds. Iniciativa Patrimonio Natural del Peru uses a financial model that grants resources to projects that meet environmental and social criteria for the conservation of protected natural areas. The Development Bank of Peru issued green bonds to finance renewable energies. Peru has two public-private initiatives to promote sustainable construction: Bono Buen Pagador Sostenible, a bonus granted by the government to reduce the mortgage loan of households considered eco-friendly; and Bono Sostenible, granted to residential projects with the sustainable household certificate issued by the Ministry of Housing.

Key indicators – Peru

	Peru		LAC		OECD
Social
	2016	2020	2016	2020	2016	2020
Extreme poverty	5.2	8.6	8.1	8.7	N/A	N/A
Poverty	19.1	28.4	25.9	26.3	N/A	N/A
Share of Internet users (% of population)	45.5	65.3	53.7	68.1	81.8	88.0
	2016	2020	2016	2020	2016	2019
Gini index	43.6	43.8	46.3	45.3	34.9	34.2
	2010	2018	2009	2018	2009	2018
Share of total population in informal households (%)	67.9	51.6	43.4	36.3	N/A	N/A
Share of total population in informal households, upper-income quintile (%)	30.5	18.2	24.5	13.6	N/A	N/A
Share of total population in informal households, lower-income quintile (%)	94.5	89.2	70.4	72.0	N/A	N/A
	2016	2019	2016	2019	2016	2019
Health expenditure (% of GDP)	5.0	5.2	6.5	6.8	8.7	8.8
SIGI index	N/A	24.5	N/A	25.4	N/A	17.5
	2015	2018	2015	2018	2015	2018
PISA score in science	397	404	411	407	489	487
Productivity and innovation
	2016	2021	2016	2021	2016	2021
Labour productivity (% of the United States)	18.9	17.8	29.0	26.6	69.9	67.2
	2016	2020	2016	2020	2016	2020
High-tech exports (% of manufactured exports)	4.8	4.8	8.4	7.2	16.5	16.2
	2016	2019	2016	2019	2016	2019
R&D expenditures (% of GDP)	0.1	0.2	0.3	0.4	1.8	2.0
Citizens’ perceptions and institutions
	2016	2021	2016	2021	2016	2021
Share of population satisfied with efforts to preserve the environment (%)	49.6	36.5	46.2	42.0	55.3	51.2
Share of population with confidence in national government (%)	28.2	23.5	34.2	39.4	40.3	46.3
Share of population that thinks corruption is widespread throughout government (%)	82.7	88.4	74.5	70.0	59.0	54.9
Share of population satisfied with the education system (%)	58.4	30.4	64.9	54.3	67.0	66.8
Share of urban population satisfied with the availability of quality health care (%)	44.1	28.9	49.2	48.9	68.2	69.5
Environment and the green transition
	2004-19		2004-19		2004-19
Loss of natural and semi-natural vegetated land (%)	0.3		1.5		1.3
	2016	2019	2016	2019	2016	2019
GHG emissions per capita excluding LUCF (t CO2e)	3.2	3.1	6.3	6.3	9.6	9.1
Air pollution – exposure to PM2.5 (annual average exposure to more than 10 µg/m3, % of population)	98.4	98.4	95.5	95.4	61.3	61.0
	2016	2020	2016	2019	2016	2020
Contribution of renewables to total primary energy supply (%)	24.5	24.5	34.2	33.4	19.7	22.9
	2016	2021	2016	2021	2016	2021
Marine protected areas (% of territorial waters)	0.5	0.5	2.5	7.3	16.5	18.6
Fiscal position
	2016	2020	2016	2020	2016	2020
Environmentally related tax revenue (% of GDP)	0.5	0.5	1.1	1.0	2.4	2.1
Total tax revenues (% of GDP)	16.2	15.2	22.2	21.9	33.6	33.5
Share of VAT (% GDP)	6.0	5.9	5.8	5.6	6.6	6.7
Share of PIT (% GDP)	1.8	1.8	2.1	2.2	7.8	8.3
Share of CIT (% of GDP)	3.8	3.3	3.3	3.4	2.9	2.7
Perception of tax evasion (%)	N/A	34.8	N/A	27.3	N/A	N/A
Debt service (% of total tax revenue)	5.8	9.2	11.3	13.0	5.6	5.2
	2016	2020	2016	2020	2016	2019
Social expenditure (% of GDP)	N/A	N/A	11.5	13.6	20.0	19.9

Note: See the Reader’s Guide for definitions and sources.

Statlink