Itaú BBA - Macro Scenario – Peru: Impeachment averted, but risks remain

Macro Latam

< Back

Macro Scenario – Peru: Impeachment averted, but risks remain

October 1, 2020

Political environment remains shaky

For the version with all charts and tables, please open the attached pdf file

Covid-19 contagion continued to recede in September, while another reopening phase of the economy was set for October, but even then, activities classified as high-risk, such as going to the movies or bars will still be forbidden.

In the middle of an economic and health crisis, the president was able to stop an impeachment process set in motion in Congress. Still, confrontation between lawmakers and the executive branch is likely to remain, creating the risk that populist measures will secure approval in Congress. 

We expect GDP for 2020 to fall by 11.9%, recovering to 9.6% in 2021 and supported by a large fiscal stimulus and expansionary monetary policy (we expect the central bank to keep the policy rate at 0.25% at least until the end of 2021). While the wide negative output gap will keep inflation low, we revised our forecast for year-end 2020 to 0.9% (before: 0.5%).

Joao Pedro Resende
Julio Ruiz


For the version with all charts and tables, please open the attached pdf file



< Back