Peru-Brazil in talks to boost investments
Trade and investment between Peru and Brazil will continue to increase in the coming years as the Peruvian president engages in talks with Brazilian authorities to eliminate non-tariff barriers to Peruvian products.
The move would allow both countries to take advantage of respective growth and strengthening economies.
A recent report by BBVA Research said that economic links between Brazil and Peru are still scarce despite significant and sustained growth in trade and direct investment in recent years.
However, it stated that there are many significant and attractive opportunities as Peru is rich in resources and Brazil offers a large market for both raw materials and goods.
"Together with the interest shown by their authorities, both the complementarity of these two economies and their relationship's low development suggest that links between them will improve at a fast pace," the report suggests.
According to Peruthisweek.com, Peru's minister of finance, Miguel Castilla said that the administration is hoping that the development of non-traditional markets will help the country recover from falls in the price of raw materials as a result of the crisis the US.
"We are in discussions with Brazilian authorities to gradually reduce these non-tariff barriers and facilitate trade to that country," he explained.
"The policy is to strengthen ties and take advantage of this great investment we have made in infrastructure, to connect with Brazil, traditionally we have given back to this great market," Mr Castilla added.
Purchases from Brazil are highly concentrated on raw materials like copper, zinc and silver and more processed products such as textiles, clothing and agricultural-industrial goods.
Meanwhile, Peru is looking to purchase materials such as crude oil, iron and steel manufactured products and capital goods, meaning that the needs and demands of both countries provide a good fit with one another.
BBVA's report claims that the new interest in a closer relationship between the two countries has emerged as a result of the rapid growth in Brazil, which has created a reduction in poverty and a surge in the middle classes.
This growing population with access to credit and considerable spending power has increased demand within Brazil making the country look carefully at external markets, the most attractive of which will clearly be its closest neighbours.
"It is in this context that Peru becomes an interesting partner for Brazil," the report explained.
Furthermore, the Amazon road, a new route which directly connects the countries, opened earlier this year, to much celebration, and is likely to give trade an even larger boost.
This is because, despite sharing a border spanning three thousand kilometres, the terrain is difficult and includes the Amazon rainforest, something which has inhibited Brazil and Peru's relationship in the past.
"This road is a dream," Miguel Vega, president of the Peru-Brazil Chamber of Commerce, told the BBC in January shortly after the road opened.
"As we say in football, the midfield dominates the game. This road will put Peru in the midfield between Asia and South America," he explained, adding that this is an ideal position for trade around the world, including with the new emerging powers of China and Brazil.
The BBVA agreed that the intercontinental roads connecting the two countries will help deepen the links between Brazil and Peru that have already grown considerably over the last couple of years.
It explained that the key opportunities for increased trade are those in finished goods and tourism, while direct investment can be used to provide a boost for energy and infrastructure sectors.
"Together with the interest shown by their authorities, both the [complementary nature] of these two economies and their relationship's low development suggest that links between them will improve at a fast pace," the report concluded.
