Peruvian economy proved it has the capacity to recover from a year full of difficulties, such as Coastal El Niño phenomenon and Odebrecht corruption scandal, Moody's Investors Service affirms in its latest report.
Due to these two factors, the Inca country's production growth slowed to about 2.6% last year, thus holding back public investment.
The Prosecutor's Office currently investigates him over alleged payments by
Brazilian construction company Odebrecht to Westfield Capital and First Capital, both linked to the resigning Head of State.
According to the credit rating agency, this crisis "weighed on
confidence indicators and economic activity earlier, but the resignation and succession by then-Vice
President Martin Vizcarra created far less uncertainty than early elections would have done."
Within this context, Peruvian lawmakers expressed their willingness to work with the new administration in order to support the country's economic recovery and continue with the corresponding
reconstruction process.
Nevertheless, the instability led Moody's to revise its GDP growth forecast for 2018 downward from
3.9% to 3.5%.
The report also points out "persistent risks stem primarily from political confrontation, weak execution of public investment as the government seats a new cabinet, or a disruption of the nascent recovery in private investment."
It must be noted tax revenue grew 14.3% and 9.8% in January and February, respectively, despite weaker economic activity.
If this pattern continues —as Moody's Investors Service believes— the Inca country might meet its 2018 deficit target without any additional revenue-enhancing measures.
(END) NDP/JAA/MVB