Latin America was already simmering before COVID-19. Now, it is lagging in its recovery. At the heart of this malaise is a big dose of political risk. Nowhere is a clearer poster child for that than Peru, poised to confirm a wafer-thin presidential election win for a leftist candidate who, during his campaign, spoke of redrafting the constitution and nationalisation. Pedro Castillo, the union-leading primary school teacher from the rural Andes, took 50.12% of the popular vote, and assuming the National Jury of Elections (JNE) finds no reason to support the opposition’s claims of electoral fraud, appears destined to be sworn in in July. Given that the US State Department called the elections a “model of democracy”, the JNE seems unlikely to stand in the way.

This development has come as something of a surprise in a country that for many years was lauded as a South American success story. Beneath commodity-driven high growth rates though, politics have been fractious for several years. A narrow victory may make that worse. Optimistic analysts note that we don’t yet know how Mr Castillo will actually govern; many a firebrand is tempered by the realities of power. Without control of Congress he will need to compromise. And anyway, they argue, his rhetoric already softened during the race. Mr Castillo also appointed a former World Bank economist as an advisor, balancing out the fears that he will be a front for Vladimir Cerron, an old-fashioned Marxist.

Still, that’s the point: we simply don’t know. Just months ago, articles trumpeted Peru’s open investment environment and business-friendly policies, despite a string of deposed national leaders, a deteriorating political climate and the world’s highest per-capita COVID-19 mortality rate. Now the country has a potentially weak president, protests over the election result and a policy agenda that could range from centrist-inclusivism to Marxist expropriation and import substitution. The lesson? Political risk has bite. Ignore it at your peril.