The economy in Peru is booming, in 2011 GDP hit almost 7% and 2012 should be equally as impressive. In the capital city, Lima, everywhere you look, old houses are being pulled down and high-rise buildings are being put up in their place. The city is going through a real transformation. This should be a great thing, it is a sign that despite the problems with the global economy, the country is marching on.

Peruvian Cocaine

With its free market policies and sustained economic growth, the country should be the poster child of the World Bank. I’m sure in some boardroom, it probably already is being touted as a big success. For tourists passing through this capital it means more five star living, great food and fancy apartments. Still, it helps to dig a little deeper, because this economic miracle is not without precedent.

Cocaine, changing the capital of Peru

Last year the White House revealed the news that Peru has topped the list, it is a title that Colombia has kept for the last few decades and Pablo Escobar revelled in; Peru is now the world’s top producer of cocaine. The US estimates that the country produced 358 tons of the stuff in 2011. This number doesn’t mean very much by itself, because the figure is pure guesswork. What does matter is the money this Peruvian cocaine brings in.

Cocaine, changing Peru

Like Medellin and Miami in the 70’s and 80’s, the cocaine trade is underwriting the money fuelling the economic boom. That’s not to say that the economy is not growing without it, but Peruvian cocaine is giving the countries economy that extra boost. The reason that you are not hearing about it, is because everything is being done behind closed doors; the Government is not cracking down, the army is not being called in, money is being handed to the right people.

How cocaine is changing Lima

For the moment at least the country is avoiding the problems of Mexico, Guatemala and Colombia. How long this situation will last is anyone’s guess, but like most things in life the honeymoon won’t last forever and like any relationship where lots of money is at stake you will probably end up reading about it on the front page of your newspaper.