Multi-dimensional Review of Peru

Volume 1. Initial Assessment

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Peru has experienced significant improvements in growth, well-being and poverty reduction since the introduction of macroeconomic reforms, economic openness and more effective social programmes in the 1990s. However, the country still faces structural challenges to escape the middle-income trap and consolidate its emerging middle class. This report reviews the main bottlenecks to boost inclusive development and well-being in Peru. These include education and skills, the labour market, innovation, transport infrastructure and logistics, governance and trust in institutions. These dimensions have considerable implications for levels of productivity, inequalities and labour informality in Peru.



Macroeconomic policies for inclusive development

OECD Development Centre

Peru’s macroeconomic performance has been extraordinary over the last decade. This performance is in part the result of a very favourable external environment, but is also a consequence of a successful combination of sound fiscal policy and monetary credibility. While the former is based on a fiscal responsibility law, the latter is supported by an inflation targeting regime under a dual monetary system. This is a great achievement: a sound macroeconomic framework provides the foundations for a more competitive economy and greater social equity. However, there is still room for improvement. Peru still has a relatively underdeveloped and inefficient financial market. Also, the high level of dollarisation of the financial system increases the economy’s vulnerability to external shocks. Finally, a comprehensive fiscal reform is needed to improve the efficiency and equity of the tax system, and in particular to increase fiscal revenues. A more effective and progressive taxation system will be crucial to finance several structural challenges highlighted in the previous chapters, and to reduce income inequalities in Peru.



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