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Political Outlook

02/03/2022

Revelations that show the presidential circle is involved in corruption cases further deteriorate the image of the Government

The political environment in February was marked by the revelation of alleged cases of corruption in the presidential circle and by the swearing in of two Cabinets in less than two weeks. Last weekend, the lobbyist Karelim López, used the legal mechanism of substantial assistance in exchange for a sentence reduction and declared that there is a criminal organization operating within the Ministry of Transport and Communications, directly involving President Castillo.

This situation has reinforced a series of acts of political control from Congress. Among these, the pressure for Juan Fransciso Silva (Minister of Transport and Communications) to step down; furthermore, the accusation of President Castillo for treason and constitutional infringement. It’s likely that this dynamic of interpellations and censure motions will continue in weeks to come.

This is the context within which the Torres Cabinet will present itself on March 8 before the Plenary of the Congress for the investiture vote. Despite the technical and moral questions concerning the composition of the Cabinet, the investiture vote is expected to win, in order to avoid the constitutional dissolution of Congress. Tensions between the Executive and the Legislative are expected to stay high.

In the face of alleged cases of corruption, the risk of a crisis of governance remains small in the short term. Although the legitimacy of a presidential impeachment currently promoted by the opposition is growing, there are currently not the 87 votes necessary to remove Castillo from his position. In consequence, it is expected that a scenario of prolonged mediocrity will persist, predominated by deterioration, scandals and erratic decisions.

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OUR PERSPECTIVE

Positive signs at the start of the year, but low economic growth is still expected

In the first few months of the year, the limited impact from the third wave of COVID-19 infections has enabled the sectors that had been lagging behind to experience a rebound. As a matter of fact, we estimate that an important part of the growth of the first few months of the year will be explained by this “rebound” in the sales in retail and some services.

La confianza sigue deprimida, pero los jóvenes comienzan a percibir mejoras en el mercado laboral

A casi dos años desde el inicio de la pandemia, la confianza de los consumidores en Lima Metropolitana continúa entrampada en niveles mínimos históricos.

New crisis triggers the third Cabinet after a second reshuffle in six months of government

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.

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