Peru presidential race tips left: Update 2

Leftwing schoolteacher and labor leader Pedro Castillo has inched past the investor community's favorite Keiko Fujimori in Peru's nail-biting presidential race.

With 95pc of the votes counted from yesterday's elections, Castillo had garnered 50.2pc of the vote, compared with 49.8pc for Fujimori, daughter of former strongman president Alberto Fujimori who is making her third bid for the presidency.

The race is still too close to call, but the possibility of a Castillo victory is sending jitters through Peru's financial markets.

Peru has been engulfed in political turmoil for four years. Caretaker president Francisco Sagasti will hand over the sash on 28 July.

Keiko, as Fujimori is known, and Castillo were the top vote-getters in 11 April elections, but neither garnered a large enough margin to avoid yesterday's run-off.

While Fujimori had posted a narrow lead in the tally early today, Castillo has now just surpassed her as rural votes favoring him roll in.

The outcome could still swing back after electoral authority ONPE tallies overseas votes that favor Fujimori.

Champion of the poor

Castillo promised during the campaign to end business as usual, claiming that two decades of economic growth have not reached average Peruvians. He stressed that 75pc of the workforce is informal -- without access to a labor contract or benefits -- and that poverty expanded from 20pc to 30pc of the population in the pandemic era. The state defines poverty as an individual with income below $95/month.

To remedy this, his Peru Libre party proposes nationalizing natural resources, including copper mines and natural gas, and increasing the state's role in the economy. In an echo of neighboring Chile, he wants to seat a constituent assembly that would rewrite Peru's 1993 constitution.

A key policy component would be reviewing tax stability contracts signed with more than 20 large-scale mining companies.

He proposed, but later walked back from, reviewing free-trade agreements. Peru has trade agreements with most of the world's top economies or blocks, including China, the EU and the US, its three chief trading partners.

Whoever wins will inherit an economy crawling out from the Covid-19 pandemic. Less than 10pc of the population had been vaccinated against Covid-19 as of early June.

Regional pattern

Peru's economy expanded by 3.8pc year on year in the first quarter after tumbling by 11pc in 2020. Unemployment remains at 15.1pc. The government at the end of May dramatically revised up its Covid-19 deaths to more than 184,000. It now leads the world in per capita deaths, according to Johns Hopkins University.

In a widely expected regional pattern, Fujimori has dominated Lima, which represents one-third of the electorate. Castillo has swept the south of the country, including Cusco, where the Camisea gas fields are located. He has carried all of the big mining regions as well.

Peru is the world's second largest copper producer after Chile, and is among the top producers of gold, lead, silver and zinc.

By Lucien Chauvin