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.
On the political front, the Executive’s capacity to implement its most radical economic and political agenda has continued to weaken this month. This is a result of three factors: 1) the continuing loss of political capital from the population, 2) the weakening in the face of the controlling bodies, such as the public prosecutor and Congress and, 3) the clearly reduced capacity to implement public policy.
Nevertheless, the sustained deterioration of public management and high regulatory risk at the sector-level continue to limit investment growth, both in the private and public sector. Likewise, low investment levels limit the recovery of quality employment, which, when added to high levels of inflation, continues to curb families’ purchasing power.
In summary, the events of the first few months of the year have been in line with our prospects in terms of the health crisis and politics, which leads us to maintain our forecast of a low economic growth of 3% for 2022. However, there are still some risks that continue to generate uncertainty about the economic outlook, such as a potential presidential impeachment or an escalation of the Russia-Ukraine conflict.
The economy maintained a solid growth pace in Q1 2025, around 3.8%, slightly above expectations. Primary sectors, such as agro-exports and fishing, continued to rebound, although they were still affected by weather conditions in Q1 2024.
This month, the political agenda has once again focused on citizen insecurity. The death of a singer from a well-known musical group, allegedly at the hands of extortionists, sparked renewed criticism of the Minister of the Interior, who was censured by Congress, which in turn triggered new protests.
Despite growing criticism, President Dina Boluarte remains reluctant to remove him from office, as Santivañez plays a key role in her efforts to obstruct investigations against her and her inner circle, including her brother Nicanor Boluarte.
