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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During the 2Q2024, economic growth was driven by the rebound of primary sectors, such as traditional agriculture and fishing, and by higher public spending, supported by an estimated increase of 11% in public wages and 16% in public investment, adjusting for inflation.
During the month of August, attention was focused on the dynamics within Congress. In view of the election of the Board of Directors and the recomposition of the ordinary commissions, numerous movements were recorded in the benches.
Although the implicit alliance between the Executive and the Legislative remains in force, in recent months we have seen a progressive weakening of the Executive.
