Key facts
- Moody's expects President-elect Keiko Fujimori to boost investor confidence in Peru.
- The agency anticipates policy continuity and safeguarding of institutional pillars like an independent central bank.
- Continued policy stability could unlock delayed mining and infrastructure projects, supporting growth.
- Political polarization and a fragmented Congress may continue to generate uncertainty.
- Peru's government debt is at 30% of GDP, offering shock absorption.
- Questions remain regarding the speed at which Peru can narrow its fiscal deficit.
Ratings agency Moody's has indicated that Peru's President-elect Keiko Fujimori is expected to enhance investor confidence and maintain policy continuity, which could help the nation sustain economic growth despite existing political polarization and fiscal challenges.
In a report issued on Thursday, Moody's stated that Fujimori's government is likely to uphold policy stability, protect key institutions such as an independent central bank, and respect contractual and property rights. Such continued stability is anticipated to facilitate the progression of delayed mining and infrastructure projects, thereby supporting growth rates projected to average around 3.5% between 2024 and 2025.
While political risks are expected to diminish, they may still pose a constraint on Peru's stable credit profile. Persistent polarization and a divided Congress are likely to continue fostering political uncertainty. The report also noted that Peru's government debt stands at 30% of its GDP, providing a significant capacity to absorb economic shocks. However, Moody's highlighted that questions persist regarding the pace at which Peru can reduce its fiscal deficit.
Fujimori, a right-wing politician, secured victory in her fourth presidential bid, defeating leftist Roberto Sanchez by a narrow margin of just over 49,000 votes, equivalent to 0.3 percentage points.