Country Risk Service Peru Updater
The Economist Intelligence Unit, April 2013, Pages: 19
Having gained the support of the urban middle classes, the president, Ollanta Humala, will implement pragmatic and centrist policies. Opposition from the left, both in the legislature and at the local level, will intensify. The Economist Intelligence Unit expects macroeconomic policy management to remain broadly prudent, in the context of a relatively weak global outlook and the persistent risk of external shocks. We expect the economy to continue to expand rapidly, with real GDP growing by 6.2% in 2013 and then averaging 5.7% per year in 2014­17. Supported by prudent fiscal management, the public finances will remain in surplus in 2013-17, at an average of 0.7% of GDP. We expect the monetary policy committee of the Banco Central de Reserva del Perú (BCRP, the Central Bank) to hold its policy rate steady in 2013, given that inflationary pressures have eased and global conditions remain weak. We expect the nuevo sol to continue to appreciate in 2013, but aggressive dollar purchases in the open market by the Central Bank, combined with other policy measures, will slow the currency's appreciation. We expect the current-account deficit to widen in the early part of the forecast period, before narrowing thereafter as export earning, supported by new mining projects, help to offset strong growth in import spending.
The main risk to Mr Humala's currently high approval ratings is a resumption of high-profile social conflict.
We expect fiscal policy in 2013-17 to remain prudent and forecast that the non­financial public sector will maintain an average annual surplus of 0.8% of GDP.
Country Risk Service Peru Updater
Peru at a glance: 2013-17
OVERVIEW
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast
Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Rating definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk
Central scenario for 2013-17: Political stability
Central scenario for 2013-17: Election watch
Central scenario for 2013-17: International relations
Central scenario for 2013-17: Policy trends
Central scenario for 2013-17: Fiscal policy
Central scenario for 2013-17: Monetary policy
Central scenario for 2013-17: Economic growth
Central scenario for 2013-17: Inflation
Central scenario for 2013-17: Exchange rates
Central scenario for 2013-17: External sector
Key risk indicators
Ratings summary
Quarterly indicators
International assumptions summary
Economic structure
Public finances
Exchange rates, interest rates and prices
Financial sector
Current account
International liquidity
Foreign payment and liquidity indicators
External trade
External financing requirement
External debt stock
External debt service
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