Peru elections:Down to the wire

　　In what has proven to be a tight presidential election race, former finance minister Pedro Pablo Kuczynski (PPK) appears to beedging out first-round winner Keiko Fujimori (Fuerza Popular), but by a tiny margin, according to preliminary official figures. With90% of total ballots processed, the National Office for Electoral Processes (ONPE) reports that Mr. Kuczynski obtained 50.5% ofvotes; while the Fuerza Popular candidate secured 49.5% of the total.

　　Rapid counts conducted by local pollsters confirm the margin so far reported by the official entity. According to Ipsos, with 100%of ballots counted, PPK ended the day with a similar 50.5% of the total vote. Pollster GfK’s rapid count also confirms to a largeextent these results giving a slightly larger edge to Mr. Kuczynski with 50.8% of the total tally.

　　If these results are confirmed, Mr. Kuczynski would have managed to close a gap that appeared to be trending against hisinterests just a week ago. Most likely, he has managed to consolidate the large anti-Fujimorismo sentiment in Peru in his favour,an element that likely played a major role in his surge following the first round elections (Chart 1). He was probably helped aswell by last week’s endorsement from leftist candidate Veronika Mendoza, who ended third in the first round with 19% support.

　　Fujimori still a force in CongressIf PPK is confirmed to be the successor of Ollanta Humala in the executive, he will not only face a divided country but also anuphill battle in Congress, as Ms. Fujimori’s party will be a force to reckon with in the legislature. Indeed, Fuerza Popularobtained in April an absolute majority with 73 of the total 130 seats in Congress compared to PPK’s 18 (Chart 2). This suggestshe will need to form up alliances and reach broad consensus in order to pursue his agenda.

　　Mr. Kuczynski, similar to Ms. Fujimori, ran on a platform that broadly supports a continuation of Peru’s existing pro-market andfree-trade economic model. As president, the former minister plans to give a jolt to economic activity with an expansion in fiscalspending as a key element, a fact we highlighted could hurt Peru’s fiscal and external positions in the medium term (see Peru:A vote for fiscal expansion).

　　The newly elected president will take office on Peru’s Independence Day (28 July).