Overview
Peru’s rapidly growing digital economy presents a wealth of opportunities for U.S. exporters, particularly in sectors such as e-commerce, FinTech, GovTech, software and digital services, and telecommunications. The Digital Ecosystem Country Assessment (DECA) for Peru, published in 2022 by the U.S. Agency for International Development, paints a detailed portrait of a nation at a digital crossroads, highlighting the country’s potential for digital transformation despite challenges in extending digital services to remote areas and policy and capacity gaps hampering equitable digital expansion. As the Peruvian government continues to prioritize digital transformation initiatives and harness the power of enabling technologies, U.S. companies with expertise in these areas are well-positioned to capitalize on the country’s increasing demand for digital solutions. Addressing Lima’s dominance in the digital financial and talent sectors and fostering a more inclusive digital economy nationwide can significantly contribute to Peru’s development goals while presenting a wealth of opportunities for U.S. technology and service providers. To learn more about specific opportunities and strategies for entering or expanding in the Peruvian market, U.S. exporters are encouraged to contact their nearest Export Assistance Center in the United States or the Commercial Section at the U.S. Embassy in Lima, Peru.
Digital Economy - Peru National Focus
Peru’s national focus on the digital economy revolves around promoting equitable access to digital services, fostering digital transformation across sectors, and strengthening digital skills and inclusion. An IMF report published in May 2024, “Productivity, Digitalization, and Artificial Intelligence in Peru,” underscores Peru’s potential to harness the digital revolution for productivity gains across various sectors, including finance, government, education, and health. Despite sluggish productivity growth and a technological gap with advanced economies, initiatives in FinTech and GovTech signal positive momentum. This comprehensive approach, coupled with the rapid growth of e-commerce and advancements in sectors like FinTech and GovTech, positions Peru as a country with significant potential for digital economy expansion, despite challenges faced by the broader economy in recent years. The report highlights obstacles such as weak competition, restricted access to financing, and insufficient R&D investment, recommending that addressing these can significantly propel Peru’s economic advancement. By embracing digital technologies and artificial intelligence, Peru stands on the cusp of a technological leap, provided it intensifies efforts in technology adoption and diffusion.
a. National Focus
Peru’s national focus on the digital economy revolves around three main themes: promoting equitable access to digital services, fostering digital transformation across sectors, and strengthening digital skills and inclusion.
The Peruvian government has prioritized equitable access to digital services through initiatives such as the Digital Transformation with Equity Project, a $50 million loan from the Inter-American Development Bank (IDB). This project aims to improve and expand access to digital services, with a particular emphasis on gender equity and diversity. The implementation of key platforms, including the National Digital Identity Platform, National Digital Talent Platform, and National Digital Economy Platform, further supports this goal of promoting equitable access to information.
To foster digital transformation across sectors, Peru has approved two programs designed to promote the digital economy and position the country as a regional benchmark by 2030. The National Digital Economy Platform focuses on promoting e-commerce for micro, small, and medium-sized businesses, strengthening digital transformation and technology-based ventures, pushing for the technologization of the financial system, and increasing technology use in the public sector. By 2030, the program aims to increase the number of companies with virtual stores on Peru Marketplace, provide training to a larger percentage of companies, and encourage more SMEs to adopt digital services.
The Digital Basic Basket Program addresses the need for strengthening digital skills and inclusion by focusing on digital literacy, connectivity, citizenship, and access to digital services in education, health, security, and rural areas. The program sets targets for increasing internet access in public educational facilities, providing tablets to students and teachers, connecting more police stations, health centers, and rural public service centers, and expanding digital skills training courses.
With 3.5 million fixed internet connections and 41.3 million mobile subscriptions in 2022, Peru is well-positioned to advance its digital transformation across the public and private sectors. The government’s commitment to these three key themes – equitable access, digital transformation, and digital skills and inclusion – demonstrates a comprehensive approach to fostering a thriving digital economy in Peru.
b. Projected Digital Economy Growth
Peru’s digital economy is experiencing rapid growth, driven primarily by the expansion of the e-commerce sector. Online sales have seen a significant increase in recent years, reaching $9.3 billion in 2021, a 35% increase from 2020. This growth is expected to continue, with projections indicating that the e-commerce market will reach $14 billion by the end of 2022 and $9.75 billion by 2024, with a compound annual growth rate (2024-2029) of 10.61%. Looking further ahead, Peru’s e-commerce market is forecast to reach a value of $15.3 billion by 2030, with a CAGR of 26.5% from 2023.
In addition to e-commerce, Peru’s digital economy growth is also being fueled by advancements in other sectors, such as FinTech and GovTech. Innovations in digital payments and wallets have led to an increase in financial account ownership, demonstrating the potential for digital solutions to promote financial inclusion. Furthermore, the adoption of artificial intelligence (AI) is expected to boost productivity across various sectors, including finance, government, education, health, IT, and construction. However, the integration of AI also presents social challenges, as workers will need to adapt to new roles and acquire the necessary skills to work alongside these technologies.
The growth of Peru’s digital economy stands in contrast to the country’s overall economic performance in recent years. GDP growth has slowed since 2014, with average and potential growth falling to around 2.5%, largely due to a decline in total factor productivity growth. Real GDP is projected to grow by approximately 2.5% in 2024, with a negative output gap closing gradually until 2026. In the medium term, Peru’s GDP is expected to grow at an annual rate of 2.4%, mainly supported by exports from new mining projects. [According to who? The IMF?]
Despite the challenges faced by the broader economy, the rapid expansion of Peru’s digital economy presents a promising opportunity for the country. The government’s focus on digital transformation initiatives aimed at boosting productivity and inclusion could help to harness the potential of the digital economy and offset some of the headwinds faced by other sectors. As the digital economy continues to grow, it is likely to play an increasingly important role in driving Peru’s overall economic development in the years to come.
Market Challenges
Peru’s efforts to advance its digital economy and boost e-commerce, digital entrepreneurship, and innovation face several regulatory challenges and digital trade barriers. These challenges include limited internet coverage in rural areas, the need to adapt regulations for emerging technologies like AI, data protection requirements, and a lack of specific regulations for blockchain assets, as well as restrictions on digital services trade (DST), political instability, and an uncertain business environment. [this is good stuff]
a. Regulatory Environment
Peru has made efforts to advance its digital transformation and boost the digital economy, e-commerce, digital entrepreneurship, and innovation, with a particular focus on benefiting small and medium-sized enterprises (SMEs). However, the country faces several regulatory challenges that impact its digital economy. One of the main issues is the limited internet coverage in rural and remote areas, with only 9% of rural Peruvian households having internet access as of 2021. Expanding internet coverage requires adapting the regulatory framework and mobilizing private investments.
Peru has taken steps to regulate emerging technologies, such as artificial intelligence (AI). The country has published draft regulations for the law that promotes the use of AI, which include measures to classify AI systems based on risk levels, require appropriate risk management, strengthen responsible and ethical use of AI systems, and ensure safety, transparency, human oversight, and accountability in AI use. The U.S. has further recommended that Peru avoid AI requirements that conflict with existing laws, use AI sandboxes to identify and resolve conflicts, and ensure its AI approaches are interoperable, safe, secure, and trustworthy while mitigating emerging risks.
Regarding data protection, Peru’s Personal Data Protection Law requires entities to collect and process personal data lawfully, obtain consent, and implement security measures. The National Authority for Personal Data Protection is responsible for enforcing compliance with this law. Peru also has an Electronic Signature Law that provides the legal framework for the use and recognition of electronic signatures.
While Peru has no specific regulations classifying blockchain assets as regulated financial instruments, authorities have warned the public about the risks associated with cryptocurrencies and tokens.
b. Digital Trade Barriers
Peru imposes more restrictions on digital services trade compared to the OECD average. Medium Small-sized exporters have pointed to the high compliance costs of dealing with incompatible regulations across Latin America. In some cases, a commercial presence is required for certain digital activities, such as obtaining a local country code top-level domain.
Peru continues to face challenges due to political instability, corruption, and social conflict, which can impact the business environment and investor confidence in the digital economy. The private sector also faces challenges due to Peru’s cumbersome and inefficient government procurement processes, though efforts are being made to align procedures with international best practices.
Firms operating in Peru have noted difficulties in securing legal solutions to commercial disputes or enforcing arbitration awards in the digital space. The judicial system is often slow, and court rulings can be inconsistent.
In 2020, Peru established the Digital Trust Framework (Urgency Decree 007-2020) which provides for personal data protection and transparency, consumer protection, and digital security. The law established the Government and Digital Transformation Secretariat (SEGDI), located within the Prime Minister’s Office, as the overall coordinator and governing body for digital security, but it placed data protection and transparency under the Ministry of Justice and Human Rights (MINJUS).
In summary, while Peru is making strides to boost its digital economy, some regulatory barriers, local presence requirements, and an uncertain business environment still pose challenges for digital trade. Harmonizing regulations and providing a stable, transparent framework will be important to fully harness the potential of digital trade in Peru.
Digital Trade Opportunities
Peru’s digital economy presents a wealth of opportunities for trade and investment, driven by the adoption of cross-sector enabling technologies and the growth of specific industry sub-sectors. The government’s focus on leveraging artificial intelligence, expanding internet connectivity, strengthening digital identity and security platforms, and promoting e-commerce and digital payment infrastructure is expected to drive productivity and open up new avenues for digital trade.
a. Cross-Sector Enabling Technologies
Artificial Intelligence (AI) is a key cross-sector enabling technology that holds significant potential to increase productivity in Peru, particularly in formal economy sectors. To fully leverage the benefits of AI, the country will need to implement structural reforms aimed at improving the business environment, fostering competition, expanding access to finance, and developing human capital.
Peru has made progress in expanding internet access, but rural connectivity remains a challenge. To address this issue, Peru must adapt its regulations and mobilize private investment to expand rural coverage. The government is collaborating with international organizations to connect students and train teachers in digital skills.
Digital identity and security platforms are essential for enabling stronger digital trade opportunities in Peru. The country is implementing a National Digital Identity Platform to enable more secure and integrated access to digital government services. Strengthening digital security and trust, especially for women and people with disabilities, is another government priority.
E-commerce and digital payment infrastructure are key drivers of Peru’s digital economy. Efforts are underway to enable interoperability between digital payment solutions and incorporate new fintech players to reduce costs and boost financial inclusion. Improving logistics infrastructure and customs systems is also important to facilitate cross-border e-commerce.
In summary, AI, internet connectivity, digital identity, cybersecurity, e-commerce, and digital payments are some of the key enabling technologies Peru is focusing on to drive productivity and expand digital trade opportunities across sectors. However, closing gaps in infrastructure, human capital, and regulation, especially in rural areas, will be critical to fully leverage these technologies and ensure inclusive growth in Peru’s digital economy.
b. Specific Industry Sub-sectors
Financial Technologies (FinTech)
Peru has made progress in FinTech, with innovations in digital payments and wallets increasing financial account ownership. Efforts are underway to enable interoperability between digital payment solutions and incorporate new FinTech players to reduce costs and boost financial inclusion. The government is working to increase access to FinTech services as part of its National Policy of Digital Transformation for 2023-2030.
Government Technologies (GovTech)
Peru ranks high in various GovTech rankings due to significant progress in digitizing its tax revenue administration at the central level. The government is collaborating with the IDB on GovTech reforms to improve digital engagement and efficiency. Key initiatives include implementing a National Digital Identity Platform, National Digital Talent Platform, and National Digital Economy Platform to promote equitable access to digital government services.
E-commerce
Peru’s e-commerce market has been experiencing rapid growth, reaching a volume of approximately $25 billion in 2023 and projected to expand to $63 billion by 2026, with a robust compound annual growth rate (CAGR) of 35%. The e-commerce sector in Peru accounted for about 10% of the country’s GDP in 2023, with online purchases still representing only 8% of total retail sales, indicating potential for further expansion. The market is characterized by a significant mobile commerce component, with leading e-commerce platforms including Falabella, Mercado Libre, and Linio, and preferred payment methods including credit cards, debit cards, and digital wallets. The government aims to further promote e-commerce for SMEs as part of its Digital Economy Program to boost digital transformation by 2030.
Software and Digital Services
Peru’s software and IT services sector has potential for growth, with productivity gains expected from increased adoption of artificial intelligence, cloud computing, data centers and other digital technologies. The government’s National Policy of Digital Transformation aims to increase the proportion of adults using digital technologies for accessing government services from 52% to 85% by 2030.
Telecommunications
Peru has made progress in expanding internet access, with 3.5 million fixed internet connections and 41.3 million mobile subscriptions in 2022. However, rural internet coverage remains a challenge. Adapting regulations and mobilizing private investment will be key to expanding access.
These sub-sectors represent some of the most dynamic and high-potential areas for critical and emerging digital technologies. Continued government and private sector investment in these areas will be important for driving digital transformation and business opportunities.