A Week After USA Election: Impact on the Peruvian Economy

PERU - In Brief 14 Nov 2016 by Roberto Abusada
Clearly the main concern relates on the effect of possible implementation of policies on the global economy. A unilateral action on trade tariffs and non-tariff barriers could bring about unfathomable global repercussions. We reckon that the effects on trade with Peru would be very limited. Trade with the US accounts for around 17% of the total albeit the share within the non-commodity categories is much larger (28%). Export of textiles and apparel to the US accounts for about 50% of the total. We cannot imagine Trump wanting to return the shoe and apparel industries back to his country. We could see the Trump administration attempting to revise NAFTA but it is difficult to assess whether the republican party that has in the past been instrumental for trade deals approval would be easily swayed toward that goal. Mexico has 81% of its trade with the US but there is extensive participation of firms in both countries on industrial value chains. FDI is concentrated in commodity producing sectors and no repercussions. No changes expected there. Además de los efectos globales de las políticas que adopte la nueva administración, el impacto directo sobre la economía peruana creemos sería limitado. It is estimated that only a little more than 400 thousand Peruvian live in the US – in addition to 200 thousand that already have the US nationality. It is conjectured that about have of the Peruvian non US citizens could have complied with the formalities to work legally. Remittance from Peruvians abroad are $2.7 billion (1.4% of GDP), of which a third originate in the US. So far the financial impacts of the US elections are mixed: The sol has depreciated by 1.5%, after the day of t...

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