Rodrigo Franco | 21 June 2024

Summary

• Peruvian President Dina Boluarte’s approval rating has fallen to 5%, making her the Peruvian Head of State with the lowest rating ever. Her decrease in popularity comes amid the ‘Rolexgate’ scandal and the detention of the President’s brother and lawyer due to alleged trafficking in influences.

• On 25 April 2024, S&P Global Ratings lowered its long-term sovereign credit rating on Peru to ‘BBB-‘ due to the political uncertainty which has eroded business confidence and economic growth.

• Despite the continued instability, Peru's outlook looks promising from a macro-business point of view due to rising copper prices and the upcoming opening of the Chancay Port, set to be the biggest in South America.

Peruvian President Dina Boluarte’s approval rating has fallen to 5%, as per the newest poll by Datum International, making her the Peruvian Head of State with the lowest rating ever. Her decrease in popularity comes amid the ‘Rolexgate’ scandal and the detention of the President’s brother and lawyer due to alleged traffic of influences. The president is currently under investigation for illicit enrichment due to an undeclared collection of jewellery and watches valued at half a million dollars, which prosecutors find highly suspicious based on her declared Presidential salary. She has since survived two impeachment attempts by the Peruvian Congress due to a lack of necessary votes. The high political fragmentation and the continued uncertainty hinder the country’s possible economic growth and investors' outlooks. Her support from CEOs has also plummeted from 71% to 12% in one year.

Despite the unpredictability and volatility which characterise present-day Peruvian politics, in recent years, the country has enjoyed macroeconomic stability due to the efforts from the Peruvian Central Bank, permitting the continuation of successful monetary policies. In 2022, Bloomberg considered Peru the most stable economy in Latin America despite experiencing five presidents in less than five years and Pedro Castillo’s fourth Prime Minister in six months. The independence of the Central Bank, and the figure of Julio Velarde, who has headed the institution since 2006, have been instrumental in calming markets despite the continued instability, and ensuring stable exchange rates, international reserves and inflation levels. Nevertheless, on 25 April 2024, S&P Global Ratings lowered its long-term sovereign credit rating on Peru to ‘BBB-‘ due to the political uncertainty which has eroded business confidence and economic growth.

Forecast

• Short-term

  • Despite the low approval rating and the continuous scandals, it is highly unlikely the President will be impeached before finishing her term, due to the political alliances forged with parties in Congress. Additionally, despite the continued instability, from a macro-business point of view, Peru’s outlook looks promising due to rising copper prices alongside the upcoming opening of the Chancay Port, set to be the biggest in South America.

• Medium-term

  • With elections in 2026, a proper assessment of the situation is unpredictable. However, the politically unstable/economically stable phenomenon has started to deteriorate. Therefore, if the political stalemate and uncertainty are not resolved, it is unlikely that the country’s macro-business environment will avoid continued suffering.