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Peru: tighter fiscal policy would help to rebalance economy

Peru’s economy expanded by a healthy 5.9% y/y in Q4, however growth continues to be heavily dependent on domestic demand. In the current environment of improved global risk appetite, there is a risk that capital inflows will exacerbate these imbalances and lead to overheated growth. We continue to believe that the most effective way of dealing with this threat is to tighten fiscal policy.

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