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How will the US government shutdown affect Peru?

An extended shutdown could have economic implications.

How will the US government shutdown affect Peru?

(Photo: Wikimedia Commons/Matt Wade)

To paraphrase Prince Klemens von Metternich, when the United States sneezes, the world is in danger of catching a cold. With that in mind, many people around the world are wondering how the US federal government shutdown is going to affect the global economy.

Peru’s Economy and Finance Minister Luis Castilla has downplayed concerns about potential economic effects of the US government shutdown on Peru. “Thank God we have international reserves in the Central Reserve Bank, we have room to deal with this instability in the markets and a financial rating that distinguishes us as a very solvent and credible country in the world,”

El Comercio reports that Castilla believes the current situation in the United States is a cause for concern, but primarily “a political matter that has to be sorted out in the congress of that country.” Castilla told press, “We foresee instability in the markets, but what we are hoping is that sanity prevails given the enormous impact.”

However, stock market analyst Luis Felipe Arizmendi told Peru21 that an extended shutdown could be potentially damaging to the world economy. “What could happen is that the shutdown generates variations in the Lima Stock Exchange. If the shutdown lasts for a month, then the United States’ gross domestic product would fall by one percentage point, and the global economy would feel that.”

Peruvian ambassador to the United States Harold Forsyth told Canal N that his embassy is feeling the effects of the shutdown, as many of the government agencies with which he and his staff work have been closed temporarily.

“Minister Castilla has said that there’s no way that the shutdown would so direct damage to Peru, but it definitely can in an indirect manner,” Ambassador Forsyth said, “The person who’s most affected right now is me, but I’m sure that they will find a solution quickly.”

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