Economy

Throughout most of its history Peru's economy was based on agriculture and mining. Economic growth was constant from the end of World War II until the mid-1960's. Since then, however, the economy has undergone a marked decline. Long-standing problems include high rates of inflation and unemployment, an enormous foreign debt, political instability, and widespread poverty.

During the 1970's agriculture and mining were replaced by services, especially wholesale and retail trade, as mainstays of the economy. Services account for about 40 per cent of the country's gross domestic product and more than 50 per cent of the workforce.

Peru's basic currency unit is the nuevo sol.

About 35 per cent of the people are engaged in agriculture. Subsistence farming predominates throughout the Sierra and in parts of the Montaña. Potatoes, cassava, hardy grains, fruits, and vegetables are among the crops grown. Sheep, Hamas, alpacas, and other livestock are raised.

Large-scale commercial farming is concentrated on irrigated land at river deltas and valleys along the coast. Sugarcane, cotton, and coffee are among the chief crops. Coca, used in producing illegal drugs, is widely grown on the eastern slopes of the Andes, especially in the upper Huallaga Valley.

Peru's manufacturing industries have expanded considerably since the 1950's. Factories producing consumer goods, such as processed foods, wool and cotton textiles, clothing, leather goods, furniture, appliances, glassware, and paint, are the most numerous. Iron and steel are produced in Chimbote; other industrial activities include shipbuilding (mainly fishing boats); petroleum refining; automobile assembly; and the making of chemicals. The Lima-Callao area is Peru's leading industrial center. Other major industrial centers include Arequipa and Trujillo.

Peru has been noted for its mineral wealth since the 16th century and continues to be a major mining nation. Minerals account for about half the country's exports in terms of value. A variety of minerals are produced, including copper, lead, zinc, petroleum, silver, molybdenum, and iron ore. Petroleum is produced in the northern coastal region, offshore, and in the jungles of the Montaña; nearly all the other minerals are produced in the Sierra.

Peru is normally one of the world's leading fishing nations. The country is a major producer of anchovetas (small anchovies), which are processed into fishmeal. The nutrient-rich waters of the Peru Current, which sweeps along the country's coast, are teeming with fish. However, periodically a phenomenon known as El Niño, which displaces the Peru Current, greatly reduces the catch.

The Pan American Highway, which runs along the coast from Ecuador to Chile, with a branch to Bolivia, forms the backbone of the road system. Numerous roads extend eastward from the coast into the Andes; few cross into the Montaña. There are few railways, and they serve relatively small areas.

Local airlines link many cities and provide practically the only contact with many remote areas. Lima's airport, which is served by domestic and foreign airlines, is the largest and busiest in the nation.