In the first month of the year, successive crises have continued to drastically deteriorate the image and credibility of the Executive. The resignation of Prime Minister Mirtha Vásquez deepened the crisis within a Government that was already facing a series of challenges. Meanwhile, tensions continue to rise between the Executive and Legislative branches, in a Congress with a high level of fragmentation and weak alliances that respond to particular interests. However, the current correlation of forces in Congress would still seem to indicate that there is no coalition capable of obtaining the necessary votes to impeach President Castillo.
Going forward, the hasty resignation of the Prime Minister, Mirtha Vásquez, and the appointment of a new Cabinet headed by Congressman Héctor Valer (Perú Democrático), will seek to reconfigure the political alliances of the Government. Finally, on the whole, no substantial improvement is seen in the selection of new ministers, and due to the way in which they were appointed, it is likely that the contradictions and tensions within this Cabinet will quickly become evident.
Last month, we identified four pieces of good news for the business environment: (i) lower prices of certain imported goods, (ii) lower political risk, (iii) improved business confidence, and (iv) some stabilization in local financial variables.
Six months into the administration, signs of an impending deterioration in the relationship between the Executive and Congress are starting to surface.
After a challenging start of the year, characterized by social conflicts and heavy rains, the Peruvian economy has begun to show signs of recovery, albeit at a slow pace.
