A Wall Street Veteran Is Revving Up Peru’s Economy

BloombergInvestors craving some Latin American exposure would do well to train their eyes on Peru. The Lima Stock Exchange’s main index is up 9 percent following the June election of Pedro Pablo Kuczynski, a Wall Street veteran and former finance minister, as president. Less than three months into his term, Mr Kuczynski has persuaded the opposition-controlled Parliament to back his economic platform, travelled to China to drum up interest in a $70 billion portfolio of infrastructure projects, and pulled off Peru’s biggest-ever sale of local currency bonds in the global market. “Consumer and business confidence is just flying, and that should help drive some growth, particularly in investment,” says Jaime Reusche, an analyst at Moody’s Investors Service.

Economists forecast 4.1 percent growth in 2017, the fastest among major Latin American economies. And Mr Kuczynski wants to rev that up to 5 percent a year by 2018 through a combination of more robust private and public infrastructure investment, a lower value-added tax, and tax incentives and bank credits for small businesses—part of a bid to shrink the shadow economy. The administration also is seeking to remove bureaucratic obstacles that have held up work on airports, gas pipelines, and roads. “You could have positive surprises next year if the government is successful in disentangling existing infrastructure projects, bringing forth new ones, and further boosting consumer confidence,” says Christian Laub, chief executive officer of Lima-based investment bank Credicorp Capital. …

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During the last several decades, the United States has invested billions of dollars in trying to help the governments of Latin America and the Caribbean deliver better lives for their citizens. This has meant helping them increase internal security by combating the illicit growing and trafficking in narcotics and the activities of terrorist groups, as well as helping them to shore up their democratic and free market institutions.

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