Peru: the macro implications of political turmoil

The impeachment of Peru’s President Dina Boluarte has once again shone the spotlight on the country’s governability problem, and it doesn’t look like next year’s election will resolve this. Peru’s strong balance sheet means the fallout is likely to be limited in the near-term. But continued political instability means that progress on important structural reforms is likely to be slow, which among other things will constrain Peru’s ability to unlock the pipeline of stalled mining projects. This is one key factor underpinning our below-consensus growth forecasts.