Lost Decade (Peru)

The Lost Decade or the Crisis of the 80s (Spanish: La crisis de los 80) was a period of economic stagnation in Peru throughout the 1980s which was exacerbated to a severe macroeconomic crisis by the end of the decade.^[1] Foreign debt accumulation throughout Latin America, a series of natural disasters, mass public expenditures, nationalizations of banks and financial institutions, and the shutting of Peru out of international credit markets led to a decade of macroeconomic decline. The financial crisis soon became adopted into the public sphere through hyperinflation in commodities, food shortages, and mass unemployment. By the end of the decade, Peru's gross domestic product (GDP) contracted over 20%, and poverty rose to 55%.^[2]

The 1980s is often deemed as "The Lost Decade" in Peru, as the result of its social and economic crises. As a result of the crisis, large waves of Peruvians immigrated to countries such as the United States, Spain, Italy, Chile, Venezuela and Argentina. The financial crisis was ultimately subdued during the first year of the presidency of Alberto Fujimori, after a series of economic reforms that attempted to resolve the foreign debt crisis and hyperinflation.^[3]

Another part of the economic problems faced was due to the Peruvian government’s fight on terrorist groups, specifically the Shining Path, and rebuilding the damage of bombings from the group (which were usually including bridges, rail lines, and power installations).^[4]