Peru Economy 1940
Borders. – In January 1942 at the Pan-American Conference in Rio de Janeiro, the dispute between Peru and Ecuador for the possession of the Amazonian territories ended. Following this agreement, Peru purchased an area of approximately 172,770 sq km, which, divided between the departments of Tumbes, Piura, Amazonas, Cajamarca, Loreto, has brought the total area of the state from 1,249,049 sq km. (according to the Sociedad Geográfica of Lima, 1936) at approximately 1,421,864 sq km; however the exact area data has not yet been published. The border line between the two countries (cfr. R. Riccardi, in Bull. R. Soc. Geogr. Ital., 1943, p. 65 ff.), Which has undergone shifts in favor of Peru, currently starting at E. on the Colombian border at the mouth of the Rio Güepi in the Putumayo, takes the SSO direction until the confluence of the Santiago with the Yaupi. From this point it becomes more sinuous, and following the course of some rivers it forms a kind of spur that ends with the Bocca Capones on the Pacific.
Demographic conditions. – The 1940 census attributed to the town 6,207,967 residents with an average density of 5.0 residents per sq. km. Subsequent assessments of the population indicate a continued rise. Lima, which is the most populous city, has 671,000 residents.
Economic conditions. – The trend of the two main export crops (cotton and sugar) is shown in the table below: domestic consumption of both has increased (6625 tons of cotton in 1937 and 11,114 tons in 1946; 75,070 tons of sugar in 1937 and t. 147,000 in 1947). According to smber, the production of rice (1946: t. 110,000; 1947: t. 85,000) and wheat (produced in 1947: about t. 105,000; imports: about t. 130,000) was insufficient for the national needs. The production of gum, barbasco, quinine and linen, which had developed during the war through agreements with the United States, was reduced in 1946-47. In progress is the timber industry in the Amazon region. Furthermore, livestock food products are insufficient for national needs. In 1941 there were 2.3 million cattle, 13.8 million sheep, 0, 9 million goats. Sheep’s wool (8000 t. In 1946) is almost totally consumed by the national industry; that of auchenidae (llama, vicuña, alpaca: 3836 t. in 1946) is mostly exported.
Oil production (see table) is decreasing while domestic consumption is increasing (almost 60% of production in 1947). Since 1940 oil has been extracted in the Amazon. Explorations are underway in this region, and planned, in the Sechura area. Mineral refining has advanced a lot (in the plants of Cerro de Pasco Copper Corp. in La Oroya, pure gold, silver, copper, lead, zinc and antimony ingots are obtained). The steel industry in Chimbote is planned. Among the new industries are those of car tires, flat glass, rayon, canned fish, quinine sulphate. Significant progress has been made in pharmaceutical articles, paints, woolen fabrics, artificial cotton and silk, footwear and leather, food, etc. Hydroelectric resources, whose potential is considerable (4,500.
Communications. – No railroads, but various roads have been built or improved, including the Peruvian section of the Via Panamericana (1939) and a road that penetrates the Amazon (Huánuco-Pucallpa, 1943). In total, the Peruvian roads, from km. 21,843 (of which 377 asphalted) in 1937, reached km. 33,476 (of which 2594 asphalted) in 1945. Recent progress in aerial communications has been significant. The port facilities were enriched by the new facilities of Callao (1937) and the new ports of Chimbote (1945) and Matarani (1947). Promising developments in tourism and the hotel industry.
Foreign trade. – The decline in exports and the demand for imported items accumulated during the war caused, in 1947, for the first time in the history of Peru, a deficit in the balance of payments as shown in the table (see below).
Finance. – The figures for the financial statements are shown below in the table.
The favorable trend of the balance of payments in the last years of the war allowed the country to anchor its currency to the dollar in 1941 on the basis of 6.50 soles per dollar and, in relation to this exchange rate, to communicate to the International Monetary Fund the gold standard of the sol of 0.136719 grams of fine. Up to the end of 1944 the aforementioned exchange ratio could be maintained in a regime of full freedom; starting from January 1945, however, the growing scarcity of dollars, which occurred as a result of increased imports from the United States, made it necessary to adopt a policy of restricting imports and controlling currency. Consequently, alongside the official exchange rate, a free exchange rate of the dollar arose which at the end of December 1947 was 12.33 soles per dollar and at the end of December 1948, 17 soles per dollar. However, at the end of January 1948 the Banco Central de Reserva’s gold and foreign exchange reserves still rose to 121 million soles., while those of the other banks amounted to about 90 million at the end of November 1947.
At December 31, 1947, circulation amounted to 699 million (December 1939 = 132 million) and deposits with commercial banks and savings banks to 1450 million, of which 970 at sight.