Policy Continuity: Most Likely Outcome for Peru Election

Overall, there is a great consensus among the candidates’ proposals (see Figure 1). Most aim to preserve the current macroeconomic policy framework, including: A responsible fiscal policy; an independent monetary policy enforced by the central bank; and the promotion of private investment. All candidates will pursue a tax reform, as they seek to increase revenues and the formalization of the economy. And only Toledo and Humala want to increase the royalty taxes that mining companies pay to the government, in order to support social spending.

Robust Growth in Peru

Peru’s economic activity accelerated in November as GDP advanced by 1.5% m/m in seasonally adjusted (SA) terms, after declining by 0.2% m/m in October and growing by 0.9% m/m in September, pushing the three-month moving average (3MMA) reading to 0.73% from 0.51% through October. Seven out of nine categories gained momentum, with construction (11.2% m/m), agriculture (2.5% m/m) and services (2% m/m) leading the economic activity, followed by retail sales (0.6% m/m), utilities (0.5% m/m) and import duties (0.4% m/m). Fishing (-22.4% m/m), mining (-3.3% m/m) and manufacturing (-0.8% m/m) registered an overall weaker result. Construction benefited from strong cement sales and advances in infrastructure projects, while services profited from solid growth in the financial sector.

Dilma Rousseff’s Support Reaches 50%

The last Datafolha poll indicated that presidential candidate Dilma Rousseff’s support reached 50% against 40% for her opponent Jose Serra, making her the most likely candidate to win. This is despite accusations of corruption against her and her team and negative reactions from her declarations about legalizing abortion in Brazil, among others. Eliminating blank or null votes, Rousseff obtains 56% of the valid votes against Serra’s 44%. Compared with the previous poll, Rousseff gained two points, the same amount that Serra lost.