I get a lot of emails and questions about the cost of living in Peru. There really is no such thing as “the cost of living” in Peru. What one person spends in Miraflores in a month will be entirely different from what another person spends in Accha, and averages tend to skew the big picture.
Here’s a comment about cost of living in Lima from an expat airline pilot:
“How much you save depends on your own personal circumstances…..working wife/single, kids/no kids (school or university age), social habits/stay at home guy, etc….so hard to say. I made 140K last year as a year 2 Captain….BUT you pay about 30% tax, and 10% goes to your pension so every month they take a whopping 40% out of your pay check. Lima is not as cheap as it used to be, housing has increased significantly, aprox 100% in last 6 years……this is fact, I just sold my apartment! Schools range from 500-1000 USD/month and if renting don’t expect to pay less than 1K per month for a decent place.
It’s true that some areas of Lima are very expensive, but on the other hand most people in Peru have a far lower cost of living (and income) than what’s quoted above. Per capita GDP in Peru 2010 was $9,200 (CIA factbook).
So I decided to do my own little experiment: I took $200 (about 544 Peruvian Nuevos Soles) out of my local bank account here today. I will try not to use my bank card for anything in the next few days, just cash, and keep track of how much I spend each day and how long it takes for my $200 to run out. Hopefully I will make it through at least a few days 🙂
Sadly, I’ve already spent some of my $200 because bills were due today. Here’s what I’ve spent so far:
- Garbage pickup, 2 months: S/.13.00 (~ $4.78)
- Water & sewer, 1 month: S/.14.00 (~ $5.14)
- Electricity, 1 month: S/.42.20 (~ $15.51)
Maybe today wasn’t the best day to start my experiment, because I’ve just completed 2 of my biggest recurring purchases in the past few days: diapers and dogfood 😉
Check back tomorrow and see how my wallet is holding up!
It’s really a shame this should be a headline in Peru’s newspaper of record, El Comercio.
“Economists: continued growth is not possible unless poverty is reduced”.
Just saying, that one is right up there with “the sky is blue” and “Bill Gates not hurting for money this week”.
But such is the dilemma that is Peru: for the suits in Lima economic growth has long been detached from quality of life for ordinary Peruvians, especially in the provinces. Take for example this chart from official INEI statistics, during a period where GDP grew at a 9% annual clip.
Chullo tip to IKN.
Now I’m not pretending to have an easy solution for the quality of life issues in Peru, but hopefully some of the suits in Lima will start to seriously look beyond the neo-liberal dogma that “what’s good for business is good for everyone”.
I’ll propose a new ideology for economists in Peru: “do what’s good for the people and economic growth will follow”.
- Stimulate the economy in the provinces
- Improve the infrastructure in Lima’s slums and in the provinces
- Respect labor and environmental protections
- Reduce bureaucracy and hold the bureaucrats accountable
The economy in Peru is too dependent on tourism and export of base metals. While those are great sources of revenue, the suits who run Peru should look at adding technology, manufacturing and quality services, the types of employment that would raise the standard of living of the average Peruvian worker.
At the end of the day, the Peruvian economy is the total of what the average Peruvian worker contributes to it, and expects to receive from it. Not in monetary “funny printed paper” terms, but in terms of products and services. It’s a no-brainer, focus on the quality of life of ordinary Peruvians and economic growth must follow.