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Political outlook


After the storm

On Tuesday November 17th–after a week of unrelenting protests throughout the country that led to Manuel Merino stepping down–, Francisco Sagasti, Member of Congress from Partido Morado, assumed the Presidency of the Republic. This crisis has changed the political environment, and considering the country’s institutional fragility, we can’t ensure that the next few months will be much calmer

The first relevant change is that of the balance of powers, which is still consolidating. At the moment, there are signs that the political capital of the Executive is a bit stronger after the crisis.

The second change in the environment has been the activation of social protest, and the role of public opinion, which have probably had an influence in the decisions made by authorities.

Despite the improvement in the political capital of the Executive and the loss of prestige of Congress, regulatory risk will remain high. This is mainly because, since taking office, Congress has shown a high level of consensus regarding the microeconomic populist measures taken and this situation will most likely continue.

In conclusion, despite the fact that after the crisis the Executive Power has gained some strength, we’re still facing a fragile political balance, given that our institutional weaknesses persist, and the political opposition could quickly gain strength again.

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Improvement trends consolidate and new risks emerge on the horizon

Last month, we identified four pieces of good news for the business environment: (i) lower prices of certain imported goods, (ii) lower political risk, (iii) improved business confidence, and (iv) some stabilization in local financial variables. 

The honeymoon period ends, but the government remains relatively stable

Six months into the administration, signs of an impending deterioration in the relationship between the Executive and Congress are starting to surface.

Four positive developments in the business environment

After a challenging start of the year, characterized by social conflicts and heavy rains, the Peruvian economy has begun to show signs of recovery, albeit at a slow pace.

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