Peru is considered to be a developing country. You will sometimes see Peru referred to as a “Third World” country, but the use of the term has declined in recent years. Peru is also considered a developing economy -- as opposed to an advanced economy -- by the International Monetary Fund's World Economic Outlook Report of 2014.
Merriam-Webster's dictionary defines Third World as a term referring to "economically underdeveloped, politically unstable" countries.
But, the Associated Press notes that the phrase "developing nations is more appropriate when referring to the economically developing nations of Africa, Asia and Latin America" -- such as Peru.
Achieving First-World Status
In 2014, Peru’s Institute of Economy and Enterprise Development -- part of the Chamber of Commerce of Lima -- stated that Peru has the opportunity to become a first-world country in coming years. To reach first-world status by 2027, the organization noted that Peru would need to achieve a sustained annual economic growth rate of 6 percent.
According to César Peñaranda, the executive director of the institute, current economic indicators place Peru as “average for the region and slightly better than the world average, so the goal [of first world status] is not impossible provided that the necessary reforms are given.” The World Bank noted that Peru is, indeed, experiencing an annual growth rate of nearly 6 percent, coupled with low inflation -- about 2.9 percent.
Poverty and low standards of education are two of the biggest issues that point toward Peru’s continuing developing status. But, the World Bank noted that "strong growth in employment and income have sharply reduced poverty rates" in Peru. Moderate poverty fell from 43 percent in 2004 to 20 percent in 2014, while extreme poverty declined from 27 percent to 9 percent over the same period, according to the World Bank.
Several major infrastructure and mining projects are helping to fuel Peru's economic growth, the World Bank notes, but to continue this growth -- and climb from developing to advanced economic status -- Peru faces some specific challenges. Among them:
- The decline in commodity prices.
- A possible period of financial volatility associated with rising interest rates in the United States.
- Policy uncertainty as the elected government faces a parliament dominated by the main opposition party.
- The impact of El Niño on the economy.
- A large share of the population remaining vulnerable to economic shocks.
Key to Peru's rising from Third World -- or developing -- status will be the country's ability to foster sustained but "equitable" growth fueled by "domestic policy reforms that increase the access to quality public services for all citizens and unleash economy-wide productivity gains, which would provide workers access to higher-quality jobs," the World Bank states.