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GROSS DOMESTIC PRODUCT PER CAPITA GDP

The Peruvian economy is benefiting from the magnitude and form healthy growth in recent years. It is an economy without major macroeconomic imbalances and much larger, diversified, strong and serious than in the past. It is noteworthy that the countries that were increasingly based on domestic demand dynamics are best able to face the international storm.
Moreover, the fiscal accounts registered a surplus for the third consecutive year, which was around 2.5% of GDP. This is consistent with the higher tax revenue product of the good results achieved by companies
According to Central Bank figures, the Andean country showed a deficit in its current account balance of 3.3% of GDP in 2008, compared with a surplus of 1.1% of GDP in 2007.
For 2009, we estimate a current account deficit of 3.3 percent of GDP.
The bank added that Peru recorded a fiscal surplus of 2.1% of GDP in 2008 compared with a surplus of 3.1 percent of GDP in 2007. Regarding the trade balance in 2008 registered a surplus of 2.4% of GDP, compared with a surplus of 7.7 percent of GDP in 2007.
Meanwhile, overseas remittances last year were equivalent to 1.9 percent of GDP compared with 2.0 percent of GDP in 2007.

The latest GDP growth figures are a clear indicator that the global crisis has already impacted the Peruvian economy and that, therefore, Peru was not "armored" with the global recession. Contrary to what the Government commented for months, the historical evidence allowed us to anticipate that the global crisis will severely impact the export sector and thus, through a multiplier effect, the nontradable sector of the economy. This is exactly what happened. The manufacturing sector, for example, experienced in February 1 drop of 7.5%, the trade sector fell by 0.2% and the construction sector grew by just 4.7%, well below projections. The anti-crisis plan the government could partially alleviate the effects of the crisis in the short term. However, the demonstrated inability of the public sector to spend efficiently the large resources that account is a major constraint. With all this, it is already clear that this year the economy will grow well below 5%.

How much can we really grow?

Economic theory tells us that there is a direct relationship between investment rates, productivity and long-term trend of economic growth. A higher rate of investment and higher productivity growth, the greater the long-term growth of the economy (higher potential GDP growth). In 2008, the investment rate was 26.6% (as percentage of GDP). If investment rates remain at these levels, how can we grow? Let's review some historical figures. In the period 1950-2008, the rate of investment in Peru was 21% and annual growth rate of GDP was 3.5%. This suggests that with an investment rate of 27%, we may steadily grow more than 3.5%. How much more? Peru never has had investment rates of 25% or more over a long period of time. Then reviews the evidence for countries that have investment rates higher than 25%. According to IMF data, in the period 1980-2008, the group of newly industrialized Asian economies (Hong Kong, South Korea, Singapore and Taiwan) had an investment rate of 28.9% and an annual growth rate of 6.3% GDP . In the same period, the group of emerging Asian economies (26 economies, including China and India) had an investment rate of 32.3% and an annual GDP growth of 7.4%. Between 1992 and 2008, the group of emerging and developing economies had an investment rate of 26.1% and an annual growth rate of 5.1%. Therefore, the evidence shows that an economy with an investment rate of around 27% can grow steadily at a rate of about 6% and that only with an investment rate of over 30% can grow to 7 %. Some say that Peru "can not afford" to grow only 5% or 6%, then we need to reduce poverty rapidly. Certainly, one would grow at rates of 20% or 30% every year in order to reduce poverty rapidly. But this is not possible. Even grow at 10% is possible in the long run, given our investment rates. Given current rates of investment would grow at a healthy rate of 6%. Unless we increase investment rates well above the current, we should not therefore seek to achieve higher growth rates. The healthy thing would grow at a rate of 6% in the coming years, given current rates of investment. Consequently, unless we increase investment rates well above the current, we should not try to reach higher growth rates.