South America goes west: In June, voters in both Colombia and Peru elected conservative, market-friendly presidents by razor-thin margins. Despite the two having similar policy platforms, our Consensus Forecasts – the average projection of our panel of the world’s leading economists – suggest that the ability of each new president to enact their agenda will differ notably in the Andes’ first- and second-largest economies by GDP.
Peru Consensus shifts up: Our Consensus for Peru’s 2026 growth of GDP, private spending and fixed investment has climbed following the elections. The result was only recently confirmed after a closely contested vote, but Fujimori’s victory nonetheless is expected to support economic activity by preserving policy continuity, loosening financing conditions and reinforcing a market-friendly approach toward the country’s crucial mining sector, which accounts for about 10% of Peru’s GDP.
Colombia Consensus capped by political gridlock: In Colombia, the victory of the market-friendly De la Espriella generated a positive initial reaction in the markets. However, the response of our Consensus Forecasts has been considerably more restrained than in Peru. The main reason for this is that De la Espriella is widely expected to face significant legislative gridlock – with his own party lacking representation in Congress – limiting his administration’s ability to advance the reforms needed to address Colombia’s structural economic challenges. As a result, panelists have made only modest revisions to their GDP growth and domestic demand forecasts. The most notable adjustment has been to the 2026 exchange-rate outlook following the sharp appreciation of the Colombian peso in the aftermath of the election.
Insight from our panelists:
On the outlook for Peru’s economy, Fitch Solutions analysts said:
“Greater institutional stability and a more investor-friendly policy agenda under President-elect Keiko Fujimori [are] set to support the ongoing recovery in hiring rates and in fixed investment. […] Price dynamics and efforts by the incoming Fujimori administration to address some of the issues (eg, social conflict, incomplete infrastructure, overly long permitting processes and encroachment by informal miners) that have long held back production should provide a significant boost to mining sector output, triggering spillover effects for the broader economy via looser financial conditions and increased government revenues that will allow the government meet its fiscal targets without entertaining significant austerity.”
Goldman Sachs’ Santiago Tellez commented on the new policy priorities in Colombia:
“We expect the incoming administration to prioritize three areas: public security, the healthcare sector, and the fiscal accounts, the latter being Colombia’s most salient macro vulnerability. Mr. De la Espriella has pledged a sizable, frontloaded fiscal adjustment of more than 3% of GDP, though specifics are likely to emerge only once the government transition is under way. The next administration will confront a polarized and fragmented Congress that will necessitate coalition-building.”
Our latest analysis:
Peru’s economic activity sped up ahead of the election.
Colombia’s central bank resumed its tightening cycle in late June.