Life in Cusco has changed rapidly over the last eight years. Leaving Lima airport Christmas 2004 no one had mobile phones. Yet two months later I returned to see the Plaza de Armas full of people sitting talking on their new cell phones.
Taxis cost 2 soles back then and in those days there were 6 soles to the pound, so you did not even think about the cost, you naturally just hopped in and drove up the Avenida El Sol or up to Sacsayhuaman in a taxi. Hardly anyone owned their own car. Then all of a sudden in 2009 everyone had private cars. Now the town of Cusco is full of shiny car showrooms. The same is true for many other cities across Peru, Trujillo, Piura, Chiclayo and Arequipa all have streets filled with people driving impressive new cars. You do not see many small cars here either, no Fiat Unos, Peugeot 107s let alone eco friendly cars that run on electricity. Big is the way to go here, big four wheel drives, big Cherokees, big long wheelbase Toyotas pick- ups. The Chelsea tractor is alive and well in Peru and there is even less space for parking in the Inca streets than there is around Sloane Square.
And then there is the department blocks, Cusco used to have a couple, 4 stories high. I live in one built 25 years ago. In its day it was the Empire State Building and the Burj Khalifa rolled into one for the residents of Cusco. Nowadays comparison to a south London housing estate would be more appropriate though without the gangs of youths waiting to mug you. The only real danger is the old ladies spreading gossip from the balconies, and that oh so cuddly white dog whose bite is definitely worse than his bark. Yet here in a town prone to the odd seismic shake, we have a 14 story private hospital made almost entirely of glass. And no one builds houses anymore, they build blocks of flats. I cannot but help thing of England ten years ago when everyone decided to buy departments on easy credit. It was easy then.
Where does all this new found wealth in Peru come from? While Europe and the States have suffered recently with the economic crisis largely due to too much credit, Peru like many Latin American countries has been booming. The Peruvian economy has grown an average of 7% each year for the last ten years. Brazil´s growth has been even more spectacular. Yet in a country whose minimum wage has only recently risen from 280U$ per month to 288U$ per month one wonders who is doing all the spending. Of course there are many who earn much more than the minimum wage, just as there are many who earn less. The average salary in Lima is said to be 480U$ per month but after paying the cost of housing and food, education and health care, that does leave much spare cash. That’s right, no social benefits here, no free education or health care.
Credit: that is where it comes from. All those luxurious new departments, all those shiny new cars are owned by the bank and by the credit card companies. Statistics from earlier this year show consumer confidence to be at a record high. Remember a mere twenty two years ago Peruvians were standing in a queue for two hours just to buy bread amid hyper inflation and a ruined economy. Times have changed. There are now 7 million credit cards owned in a population of 29 million. Bank loans have increased some 18% in the last year. Visa and MasterCard adverts spread their message of easy money across the airwaves, and across billboards from Cajamarca in the north to Puno in the south. Back in 2009 I saw an advert offering credit cards to those who earn minimum salary. At the time that was 150 U$ per month. With a salary of just eighteen hundred dollars per year you too could earn the right to get yourself in debt.
Latin America may be booming now but one day someone is going to have to pay for all that credit. Having destroyed the economies of Europe and the States it is pretty clear that the banks and credit card companies have found themselves new victims. 2020 the year when the Latin American economic crisis begins, you heard it here first.