The Peruvian economic miracle!

[Cain]

http://www.slate.com/id/2223753/

In the latter half of 2008, being a poor, export-dependent, commodity-producing country set you up for a vicious downturn. But Peru has weathered the storm, in large part because President Alan García, an old leftist turned center-leftist, and the Peruvian central bank have proved adept at a set of capabilities notably lacking in the United States in recent years: sound fiscal and financial management. Fearful of a return of hyperinflation amid rapid growth, Peru's central bank raised interest rates throughout 2008. Instead of spending the foreign currency that piled up on its books ($32 billion at the end of 2008), the government saved it. In 2008, Peru ran a $3.3 billion budget surplus.

And so, when troubles came, it was able to respond in textbook fashion. In December 2008, García announced a stimulus program, promising to boost government spending by $3.2 billion, and to take up to $10 billion in further measures. The total of $13 billion in promised stimulus doesn't sound like much, but that's equal to about 10 percent of Peru's GDP. (By contrast, the big stimulus package Congress passed in February was about 5 percent of U.S. GDP.) The central bank's 2008 vigilance against inflation left it with plenty of room to cut rates. So far this year, it has reduced the benchmark lending rate from 6.5 percent to 2 percent.

Given the mess Peru was in when I was there, circa 2003, that is pretty impressive.  Admittedly, a robust black economy not reliant on the banking system, especially in the towns along the Inca Trail and in the more isolated regions, may have helped manage the personal impact of the economic crisis as well, but nothing except good fiscal policy can seem to account for the good fortunes of the legitimate economy, right now.

[Elder Iptuous]

the smart money is investing their savings in  Pan Flute ETFs...

[Cain]

They should base their entire economy on the alpaca, and guinea pig.  It never did the Inca any harm...

[Kurt Christ]

Not that it gives me any special insight to their economy, but I went to high school with a Peruvian who went to visit her family in Lima this summer.

[Batty Kissinger]

Thank you Kurt: I didn't really get it until you said that.