Social Tensions Still Running High

Peru's short-term political risk rating, though still at a high 70.4, could take a turn for the worse if social tensions remain high. Our rating for Peru rose from 67.9 back in June due to a sharp drop off in inflationary pressures this year. However, an incident in late September, in which security forces attempted to break up a strike and roadblock by Doe Run smelter workers, turned violent, leaving one dead. Earlier efforts by the administration of President Alan García to ease tensions by allocating greater autonomy to regional leaders may bear some fruit in the medium term. For the time being, however, we remain wary of an increase in tensions which, in turn, would lift political uncertainty in the country.

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