Research Briefing | Jul 30, 2021

Peru | Castillo risks are more in the optics than the agenda

Castillo risks are more in the optics than the agenda - iPad

President-elect Pedro Castillo will struggle to pass legislation in Peru’s fragmented Congress, meaning the proposals that markets most worry about are unlikely to become reality.

What you will learn:

  • But if he fails to regain investor confidence, the economic damage could be severe.
  • Should private sector confidence remain low next year, taking the sol to 4.50/$1 in 2022, per capita income would take another year to recover its prepandemic level.
  • Meanwhile, external debt would shoot up to a 20-year high, squeezing the balance sheets of households, firms, and the government.

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