2008 Lima Conference: Peru and the Global Economy

Speakers:

• Alan García Pérez, President of the Republic
• José Antonio García Belaunde, Minister of Foreign Relations
• Mercedes Araoz Fernandez, Minister of External Commerce and Tourism
• Luis Valdivieso Montana, Minister of Economy and Finance
• Harry Conger, Head of North and South America Operations, Freeport-McMoRan
• Alejandro Cuadrado, Vice President, Emerging Markets Research, Merrill Lynch & Co., Inc.
• Aldo Defilippi, Executive Director, Cámara de Comercio Americana del Perú
• Eric Farnsworth, Vice President, Council of the Americas
• Gonzalo Gutiérrez Reinel, Vice Minister of Foreign Relations
• Pedro Pablo Kuczynski, Chairman AMG y Taiwan Greater China Fund
• David Lemor, Director, Executive Director, Proinversión
• Juan Francisco Raffo, Chairman Raffo Group, Representative of Perú for ABAC
• Carola Sandy, Director, Emerging Market Research, Credit Suisse
• Susan Segal, President and CEO, Americas Society/Council of the Americas

Summary

On September 4, 2008, the Americas Society/Council of the Americas hosted the conference “Peru and the Global Economy” in Lima as part of the 2008 Latin American Cities Conference series. The conference was held in association with Peru’s Ministry of Foreign Relations.

Speakers from the private and the public sector offered perspectives on Peru’s economic situation in the context of both the region and the world. Speakers generally agreed that Peru has demonstrated that it has one of the best recent economic performances in Latin America and analysts highlighted Peru’s achievements in terms of attracting investment, reducing poverty, and creating jobs.

However, inflation served as a source of concern at the conference, and speakers emphasized that it serves as one of the main challenges facing the Peruvian economy as well as the region. Speakers also discussed international trade and potential new partners, such as China and the EU. They lauded Peru’s recent rating upgrades and the country’s adherence to the OECD Declaration of International Investment and Multinational Enterprises.

Remarks by President Alan García Perez

During the closing remarks, President García spoke about the external factors affecting the Peruvian economy, particularly the rising price of food and oil. He was optimistic, though, saying that hese challenges would be overcome by joint efforts involving different sectors of the economy and by the country’s strong economic growth. The president emphasized the importance of the free trade agreement negotiations that were being carried out with the EU and the Andean Nations and with China and Peru. He mentioned the country’s economic data and reminded that today’s challenges were just minor hurdles in the country’s development path.

Economic Perspectives on Peru and the Region

Credit Suisse’s Carola Sandy talked about the global economic slowdown and the repercussions on the Peruvian economy. She explained that Credit Suisse expects a mild recession in the United States. With the price of commodities remaining, the effects if the U.S. slowdown will be limited in the case of Peru. Sandy also pointed out that Peru must do more in order to fight unemployment, the informal workforce, and poverty. According to her, the best way to meet such challenges would be to diversify the country’s exports.

Alejandro Cuadrado of Merrill Lynch, also talked about the Peruvian economy in the global economic context. Like Sandy, he suggested that the U.S. economy faces a recession but that the country and the region are now less vulnerable to external shocks. Inflation, however, is still is a major issue for the region that will consequently force central banks to make additional fiscal and monetary adjustments.

The Future of Peruvian Investment: APEC and Beyond

In two panel conversations, participants spoke about Peru’s progress in terms of investment, and the many prospects presented by the APEC CEO Summit taking place in Lima this year. The participants of the first panel—“The Future of Peruvian Investment”—agreed that Peru is undergoing a great moment in its economic history with investment at an all-time high, especially in significant sectors such as mining. Harry Conger, representing Freeport McMoRan Copper and Gold, stated that operations in Peru have been progressing smoothly and will likely continue to do so, especially with the worldwide boom in commodity prices. AMG’s Pedro Pablo Kuczynski and Proinversión’s David Lemor both agreed that the positive outlook applies to other sectors within the Peruvian economy. Lemor warned, however, that much remains to be done in terms of fomenting and promoting increased investment in the country.

Vice Minister Gonzalo Gutierrez and ABAC Representative Juan Francisco Raffo, both participants in the second panel, identified APEC as a way of promoting new investment, as well as of cementing current investment relationships. They agreed on the significance of APEC for Peru’s status as a protagonist and active participant in the regional economic scene.