Peru: Political Crisis Is Threatening The Rebound In Investment
BNP Paribas | Jan 10, 2018 06:17AM ET
Economic activity in Peru should benefit from a rebound in investment, rising by 5.3% y/y in Q3 2017, after thirteen consecutive quarters of decline. Investment in the mining sector should be a key driver, along with reconstruction efforts (El Niño strongly hit the country in Q1 2017) and an ambitious infrastructure modernization programme.
However, the political crisis clouds the favorable outlook. Tensions have arisen since the Oderbrecht scandal broke out in Peru in January 2017. Late December, President Kuczynski narrowly escaped an impeachment procedure. His decision to grant a pardon to former President Fujimori (convicted of corruption and crime against humanity) has caused several departures in the government and popular demonstrations. In this context, private investors could decide to postpone their investment decisions, while the government could delay some infrastructure projects.
by Hélène DROUOT
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