Assessments

Peru's Economy Gets a Wake-Up Call. Will Its Leaders Listen?

Jan 6, 2021 | 19:01 GMT
Peruvians wearing masks to protect themselves from COVID-19 wait outside a bank to collect government aid bonuses in Iquitos, Peru, on June 15, 2020.

Peruvians wearing masks to protect themselves from COVID-19 wait outside a bank to collect government aid bonuses in Iquitos, Peru, on June 15, 2020.

(CESAR VON BANCELS/AFP via Getty Images)

Peru is a rare emerging market country that has time to address long-term issues without putting immediate growth at risk -- but only if it takes advantage of that grace period to act. Peru’s primary economic headwinds include reduced growth momentum, with concerns about the country’s long-term financial prospects and political stalemates delaying crucial economic reforms. Such headwinds could hamper fiscal deficit reduction if Peru cannot legislate tax increases or resist spending pressure. In addition, global GDP growth will determine the demand for commodities and metals prices. ...

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