COVID-19 will have wide-ranging impacts in Peru

Subject

The likely impacts of COVID-19.

Significance

The Peruvian government is struggling to contain the COVID-19 pandemic. Its draconian measures have led to a lockdown involving the suspension of much economic activity. This decisive response has helped maintain President Martin Vizcarra’s popularity and has closed down space for opposition groups. An ambitious spending plan has been announced as an economic palliative.

Impacts

• Peru’s high level of international reserves provides a cushion for increased spending.
• Poverty rates are likely to increase substantially this year.
• Increased fiscal spending will test the administrative capacities of the public sector.
• Tourism will be particularly badly affected.