Peru’s estimated gross domestic product (GDP) in 1999 was $51.9 billion. Although the economy remains primarily agricultural, the mining and fishing industries have become increasingly important. Peru relies primarily on the export of raw materials—chiefly minerals, farm products, and fish meal—to earn foreign exchange for importing machinery and manufactured goods. During the late 1980s, guerrilla violence, rampant inflation, chronic budget deficits, and drought combined to drive the country to the brink of fiscal insolvency. However, in 1990 the government imposed an austerity program that removed price controls and ended subsidies on many basic items and allowed the inti, the national currency at that time, to float against the United States dollar.

Peru is a developing country whose economy has long been dependent upon the export of raw materials to the more developed nations of the Northern Hemisphere. It is one of the world's leading fishing countries and ranks among the largest producers of bismuth, silver, and copper. In recent decades, the country has struggled to modernize its economy by developing nontraditional export industries as well as the manufacture of consumer items to meet local needs. Serious economic problems persist, however, in several areas. A shortage of investment capital is paralleled by a loss of university-trained technicians to offers of higher salaries abroad. Extensive destruction of transportation and agricultural systems occurs periodically from earthquakes, landslides, and other natural disasters. The limited agricultural areas do not meet the needs of the rapidly expanding population, resulting in continually rising imports of foodstuffs and difficult attempts to alter the nation's farming and eating habits. To remedy these and other economic deficiencies the government nationalized the petroleum and other industries in the late 1960s and early 1970s and made extensive efforts at agrarian reform. Nationalization, however, created additional economic problems, including massive government debt and a large trade deficit. This caused successive Peruvian governments to reassess the role of the state in the economy and to reopen some economic sectors to private entrepreneurs.

The Peruvian economy has become increasingly market-oriented, with major privatizations completed since 1990 in the mining, electricity, and telecommunications industries. Thanks to strong foreign investment and the cooperation between the FUJIMORI government and the IMF and World Bank, growth was strong in 1994-97 and inflation was brought under control. In 1998, El Nino's impact on agriculture, the financial crisis in Asia, and instability in Brazilian markets undercut growth. And 1999 was another lean year for Peru, with the aftermath of El Nino and the Asian financial crisis working its way through the economy. Political instability resulting from the presidential election and FUJIMORI's subsequent departure from office limited economic growth in 2000.