Election points to mounting instability risks in Peru

Significance

The voting underscores deep social divides. If the result stands, it opens the way to a left-of-centre government whose stated programme has business worried. Fujimori’s claims of fraud have not been substantiated but may encourage street violence between rival supporters.

Impacts

• Unless Castillo can reassure business, capital flight will continue, putting downward pressure on the exchange rate.
• Negative investor sentiment will be partly offset in the longer term by the increase in prices for minerals.
• Fujimori's claims of irregularities will increase and extend uncertainty, and will prompt widespread anger if the result is reversed.