In brief

Following an economic contraction in 2023, EIU expects GDP growth to recover in 2024, largely reflecting positive base effects and ongoing disinflation. Political uncertainty will continue to weigh on the economy in 2024 and into the medium term. The president, Dina Boluarte, remains unpopular, owing to a contested ascent to office (which elicited widespread disapproval), but protests demanding her resignation have largely waned. An informal coalition with centrist and right-wing parties will support Ms Boluarte's efforts to retain power, as her removal would trigger early elections and precipitate other legislators' departure from office. Even so, the risk that Ms Boluarte will leave the presidency before her term ends in 2026 will remain high. Economic deceleration, political scandals or self-serving behaviour from the government are likely to bring people back onto the streets and could prompt Ms Boluarte's fragile coalition to abandon her. Peru's long-standing commitment to fiscal discipline is also slipping in the face of pressure from a populist Congress; EIU expects the government to stray from the fiscal rule again in 2024. 

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