Peru's humbled Humala faces stasis in last year

Significance Following a congressional vote on July 26, Luis Iberico, an opposition figure, will preside over Congress during Humala's final year in office. Hitherto, the ruling Gana Peru has retained the post that is essential to arranging parliamentary business. Politics over the next twelve months will be dominated by electioneering, possibly providing some last-minute respite for the embattled Humala. Impacts Little by way of bold legislative initiatives can be expected over the next twelve months. Candidate in-fighting will contribute nothing towards raising voters' jaundiced view of the workings of democratic institutions. Congress will remain highly fragmented over the next five-year period of government. This year and next, the economy is likely to perform poorly, although exports should increase as new mining projects come on stream.

Puerto Rican shutdown would increase default fears

Significance Puerto Rico is facing a severe fiscal crunch; its general obligation bonds are rated junk status and the government has said that a 2.9 billion dollar bond issuance -- at risk because of the congressional vote -- is required to prevent a shutdown in the next three months. Impacts There is little-to-no prospect of Puerto Rican statehood while Republicans control the US Congress. Puerto Rico would gain five representatives and two senators, likely to vote Democratic. However, this may encourage some Republicans to back federal intervention on debt, to ward off calls for statehood.