Peruís economy is well managed, and better tax collection and growth are increasing revenues, with expenditures keeping pace. Private investment is rising and becoming more broad-based. The government has had success with recent international bond issuances, resulting in ratings upgrades.

Peru registered a $5.2 billion trade surplus in 2005, as exports swelled to $17 billion, up 37% from 2004. Peruvian growth was propelled by high mineral prices, U.S. Andean Trade Promotion and Drug Eradication Act (ATPDEA) benefits and completion of the Camisea gas project. The trade surplus drove up reserves and caused the currency to strengthen 3.4% against the dollar over the year.

Peru's strong economic performance allowed it to buy back $2 billion in debt from the Paris Club in June 2005.

Peruís major trading partners are the U.S., the European Union (EU), China, Chile, and Japan. In 2005, 30.6% of exports went to the U.S. and 17.9% of imports came from the U.S. Exports include gold, copper, fishmeal, petroleum, zinc, textiles, apparel, asparagus and coffee. Imports include machinery, vehicles, processed food, petroleum and steel. Peru belongs to the Andean Community, the Asia-Pacific Economic Cooperation forum (APEC), and the World Trade Organization (WTO).

The basic legal structure for foreign investment in Peru is formed by the 1993 constitution, the Private Investment Growth Law, and the November 1996 Investment Promotion Law. Although Peru does not have a bilateral investment treaty with the United States, it has signed an agreement (1993) with the Overseas Private Investment Corporation concerning OPIC-financed loans, guarantees, and investments. Peru also has committed itself to arbitration of investment disputes under the auspices of the World Bank's International Center for the Settlement of Investment Disputes (ICSID) or other international or national arbitration tribunals. The Report to Congress on Expropriation Claims and Certain Other Investment Disputes (Section 527) lists 6 active investment disputes in Peru involving U.S. companies for 2005, many of which are either under arbitration or the jurisdiction of the local courts.

In August 2004, Peru inaugurated operations of the Camisea natural gas project. Camisea gas is fueling an electricity generator and six industrial plans in Lima, with other facilities in the process of switching to gas. In a second phase, liquefied natural gas (LNG) will be exported to the west coast of the United States and Mexico. The gas and condensates from Camisea are equivalent to some 2.4 billion barrels of oil, approximately seven times the size of Peruís proven oil reserves. The Camisea project is expected to gradually transform Peruís economy and catalyze national development. Once the export phase is in place, the project is expected to boost GDP by 1.3% annually for 20 to 40 years, draw over $3 billion in FDI, create thousands of jobs, generate $10 billion in government revenues, and turn Peru into a net energy exporter.

Peru is the worldís second-largest producer of silver, sixth-largest producer of gold and copper, and a significant source of the worldís zinc and lead. Mineral exports have consistently accounted for the most significant portion of Peruís export revenue, averaging around 50% of total earnings in 1998 to 2005.

Despite Peruís macroeconomic success, major challenges remain. The Government of Peru faces strong social pressures to reduce poverty of 52% (under $58/month) and extreme poverty of 19% (under $32/month). One-fourth of children under five are malnourished. Wealth and economic activity are overly concentrated in Lima and other major cities, with rural Andean and jungle areas suffering extreme poverty. Unemployment and underemployment levels total 64.5% nationwide. Growth is barely strong enough to generate employment faster than new entrants come into the labor force. The government lacks revenues for adequate social investment. Boosting long-term growth and reducing poverty will require strengthening the judiciary and other institutions, reducing corruption and completing other reforms to improve the investment climate.