Peruvian Businesses During COVID-19

• Over 45,000 companies in Peru ceased operations due to COVID-19 in 2020
• The strict quarantine imposed in Peru between March and May led to an 11% drop in the Gross Domestic Product (GDP) because of closures
• The closure of businesses and reduced demand led to the shutdown of many formal companies, but not as many as were created during the same period

Economic Activity Changes

• A factor that helped formal businesses avoid closing was the ability to change their business activity
• Examples include the gay nightclub Downtown and the San Antonio café, which became "mini-markets" during the quarantine
• Peruvians are very creative and resilient and were able to adapt to the situation
• There was a reduction in the workforce and temporary work suspensions, but not as many company closures as expected
• Most new businesses were in retail and wholesale trade, followed by transportation and manufacturing

Shift to Retail Sales

• In the fourth quarter, almost 40,000 companies were created in the retail and wholesale sectors
• This accounts for 48.5% of all new companies, half of which were involved in trade or the sale of tangible goods
• The number of retail businesses nearly doubled between the first and fourth quarters of the year, from 15,000 to 27,000
• Most businesses created during the pandemic are micro-enterprises, in a country where 90% are micro-enterprises and over 70% of workers are in the informal sector
• Of the 83,170 companies created in the last quarter of 2020, 62% (over 51,000 businesses) were sole proprietorships
• Almost 60% are one-person businesses, similar to the number of companies that closed, with over 7,200 sole proprietorships closing in the fourth quarter

Income Supplementation

• Companies allowed to not cut ties with the worker, could reduce work hours
• The director of the CCL, stated that they can have 15,000 associates in the country
• There is an inherent need to find additional business to compensate for wage and job loss
• The government and tax administration have allowed these business changes in the Single Taxpayer Registry (RUC) to maintain formality in the Peruvian economy
• Supporting the creation of formal companies, from small to large ones
• The majority of new companies (39% or 32,520) were created in Lima in the last quarter of 2020, followed by Arequipa (4,948) and La Libertad (4,915)
• Peru has a concentrated economy