With a land area of 1.3 million km2 and 22.5 million people ( 1992), Peru ranks fourth in land area and fifth in terms of population in Latin America. Peru's population growth (2.3% per annum in the 1980s and a forecast of 2% in the 1990s) and urbanization rates (70% in 1989) are higher than the world average. 1 Most Peruvians are mestizo or Indian; a small percentage of the population is of pure European or East Asian heritage. 2
The performance of the Peruvian economy in the 1980s varied significantly from year to year. Calculated on an average annual basis, real GDP grew at a rate of 2.1% from 1980 to 1988 but declined at a rate of 8.7 percent from 1988 to 1990. While GDP growth was positive in 1991, the Peruvian economy continue to experience negative overall GDP growth during 1990-1992. The economy rebounded in 1993 and the GDP growth was estimated to be 6 percent during the year. Inflation reached 7,482 percent in 1990, but sharply declined to 410 percent in 1991, 74 percent in 1992 and 40 percent by the end of 1993. 3 Currently, the government is focusing on curbing inflation. However, this effort is complicated by exchange rate fluctuations. The devaluation of the inti and the introduction of a new currency (the new sol), while helping to bolster Peru's exports, could lead to either a new jump in inflation or forced price control. The government appears to be trying to solve the problems of inflation and the inti's overvaluation simultaneously. Peru's exports have increased slightly since 1989. The United States accounts for about one-fourth of both exports and imports. With a sizeable debt of US$21 billion in 1992 and a lack of outside funding, the growth of Peru's economy, including the hydrocarbons sectors, will be sharply constrained.
Peru has long been a net energy exporter, exporting mainly fuel oil and smaller amounts of gasoline. However, in recent years the country has gradually