Australia’s ties with Peru are growing steadily. After all, it was less than a month ago that Peru made headline news in Australia. Out of 2,500 tourists stranded at the popular tourist destination of Machu Picchu after a crippling mudslide, 170 of them were Australians! The figure was hardly surprising as 25,000 Australian’s visit Peru every year.
But Machu Picchu isn’t all Peru has to offer Australia. In fact, never before Latin America looked so inviting and Peru is no exception. In 2008-2009 trade between Australia and Peru reached $A 252 million, Australian exports amounting to A$134 million. Australian exports were concentrated in milk and cream, civil engineering and parts, goods vehicles and analysing and measuring instruments.
Like many of its Latin American counterparts the Peruvian government undertook a lot of privatisation and other market-orientated economic reforms in the 1990s and the affects have now taken hold. Peru has outperformed the rest of Latin America and indeed the rest of the world with impressive annual growth rates that peaked at 9.8% of GDP in 2008 before the onset of the global financial crisis. In the last decade, Peru has promoted trade through investment reforms and a series of bilateral FTA’s.
With out a doubt the mining and construction sector has been the back bone of Peruvian growth. Peru is one of the world’s top mining countries with large deposits of copper, iron and zinc. 60% of Peru’s merchandise exports are minerals and like Australia, Peru has benefited enormously from the boom in commodity prices.
The down-side of this of course is that Peru is vulnerable to any fluctuations in commodity prices and could experience a recession in the event of a slump. At the moment the GFC has delayed a number of large U.S-backed projects worth billions of dollars and as a result the Peruvian economy has slowed significantly.
But the strong demand for minerals from China and Asia, as well as the number of large government projects has stopped the mining sector from grinding to a halt. If we’re lucky, numerous future projects should fuel demand for Australian engineers and suppliers of future goods and services. Peru remains incredibly attractive for Australian businesses.
The Peruvian market is no stranger to Australian business. There are several big-name Australian businesses already set-up in Peru including ALS Chemex, Pasminco Explorations, Rio Tinto, BHP Billiton, Burns Philp, Amcor Packaging, Orica and Downing Teal. Australian suppliers have succeeded in the Peruvian market for mining locomotives, slurry pumps and mineral processing control systems.
There is a lot more money to be made. Peru is going to need more mining equipment, gear, machinery, shovels, software, compactors, safety equipment and much more that could potentially come from Australia. We have the know-how, let’s use it. The economic relationship between Peru and Australia has a bright future!
Amy Doyle – International Market Analyst