On Tuesday November 17th–after a week of unrelenting protests throughout the country that led to Manuel Merino stepping down–, Francisco Sagasti, Member of Congress from Partido Morado, assumed the Presidency of the Republic. This crisis has changed the political environment, and considering the country’s institutional fragility, we can’t ensure that the next few months will be much calmer.
The first relevant change is that of the balance of powers, which is still consolidating. At the moment, there are signs that the political capital of the Executive is a bit stronger after the crisis.
The second change in the environment has been the activation of social protest, and the role of public opinion, which have probably had an influence in the decisions made by authorities.
Despite the improvement in the political capital of the Executive and the loss of prestige of Congress, regulatory risk will remain high. This is mainly because, since taking office, Congress has shown a high level of consensus regarding the microeconomic populist measures taken and this situation will most likely continue.
In conclusion, despite the fact that after the crisis the Executive Power has gained some strength, we’re still facing a fragile political balance, given that our institutional weaknesses persist, and the political opposition could quickly gain strength again.
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The Government’s main allies, Fuerza Popular and APP, leveraged the crisis triggered by the murder of 13 mine workers in Pataz to strengthen their influence over ministerial appointments.
So far this year, the economic recovery appears to have consolidated, with growth becoming more broad-based. Domestic demand has shown solid performance.
In the first quarter of the year, economic growth remained solid (3.6%). This was the result of a combination of favorable dynamics for GDP.
