The lack of economic policy changes by President Ollanta Humala’s government will continue to progressively increase business confidence and revive private investment, says Moody's Sovereign Risk Group Vice President and Senior Analyst Jaime Reusche.
This recovery will be supported by the fact that so far all of the pre-candidates for next elections are known and no anti-system discourse is perceived among major contenders.
“If this trend continues until December-January, business trust will likely continue to grow little by little and will translate into a private investment upturn,” he was quoted as saying by Andina news agency.
The ratings agency is quite sure the economic policy framework will remain unchanged. “The only change will be that part of the fiscal stimulus will be withdrawn, but it would be a gradual effect,” he stated.
Minimum Wage
With regard to the government’s decision of maintaining the minimum living wage at S/.750 (about US$235), he said a potential increase might become counterproductive to the efforts made to overcome informality.
“Taking into consideration that it [the minimum wage] is a particularly sensitive subject –which on the one hand creates expectation among the population, but on the other can be counterproductive to the fight against informality– economic authorities will most likely continue to debate the costs and benefits of such measure,” he indicated.
Furthermore, another possible scenario is that if a minimum wage rise is adopted within a context in which productivity has not sufficiently increased, this might occur at the same time a labor reform initiative is carried out, “which is one of the great issues still facing the country.”
(END) RGP/RGP/RMB
Published: 7/29/2015