How Peru’s drug trade is threatening its economic growth

Peru has been hailed an emerging market success story, with more than a decade of GDP growth in excess of 6%. While booming mining exports have been the overwhelming driver of this, the shopping malls and SUVs in Lima and other major cities are evidence that domestic demand has also been buoyant. Since the fall of the authoritarian government of Alberto Fujimori in 2000, Peru has enjoyed an unusually long period of political stability, with orderly changes of democratically elected government in 2006 and 2011, and continuity in economic policy. All of this is in sharp contrast to the economic and political chaos that characterised the country in the 1980s and 1990s. Hyperinflation, high levels of corruption and terrorist threats from the country’s communist party known as the Shining Path and the marxist Túpac Amaru Revolutionary Movement were a common feature. But the recent economic boom and political stability mask a series of other severe long-term challenges. Leaving aside the potential for economic difficulties in commodity prices and a plummet in international demand for Peru’s natural resource exports, the country’s role in the international narcotics trade is cause for concern. Publisher statement: This article is available under a creative commons Attribution NoDerivatives licence http://creativecommons.org/licenses/by-nd/4.0/ .