The head of the second phase of the military government, General Morales Bermúdez, reoriented Peru's economic strategy in much more conservative directions. Many of the specific Velasco reforms were dropped, although land reform and the state enterprise sector remained intact. Because of pressure from the IMF, average tariff rates were cut from 66 percent in 1978 to 34 percent by 1980, and the enormous battery of specific quantitative restrictions on trade was trimmed down greatly: the number of tariff positions under quantitative controls fell from 2,890 in 1978 to 124 by 1980.

On the side of macroeconomic management, the second-phase military government put into effect a desperately needed correction of the exchange rate in order to stimulate exports and greatly reduce public-investment spending. The exchange-rate policy worked well, achieving the country's first significant growth of manufacturing exports. Peru's share of the manufacturing exports of nine leading Latin American countries increased from 2 percent for 1970-74 to 10.9 percent for 1975-79. Accompanied by better prices for traditional exports, manufacturing exports helped create a substantial current account surplus by the end of the decade. But devaluation fed back into inflation through price increases for imports and exports, and continuing rapid growth of the money supply helped spread the inflationary effects of devaluation through the whole economy.

Data as of September 1992