Calls to move the general election to December 2023 are intensifying
Social unrest in Peru has intensified in January, with over 50 deaths following the ouster of former President Pedro Castillo in December. While episodes of unrest have taken place across Peru, it has been most acute in the country’s southern regions, which saw the most substantial disruptions to mining and agricultural supply chains. In December, Peru’s Congress gave initial approval for new general elections to be held in April 2024. However, protesters and politicians are calling for elections to be held this year instead, an issue that Congress is set to take up in February. Clients should expect B2B demand to remain dampened in the near term as disruptions weigh on business confidence and investment. Peru’s mining and agricultural industries are among the most likely to see dampened B2B demand due to elevated exposure to the impacts of roadblocks and other protest activity. In the country’s more affected southern regions, B2C demand will also remain slow, though consumption in the primary population centers, including Lima, will be far less affected by disruptions to consumer activity.
Overview
The impact of social unrest in the southern region of Puno has been particularly acute, with persistent roadblocks and other major disruptions to commerce and basic business activity. This has translated into shortages and sharp increases in prices for basic consumer goods for those areas. Lima has also seen protest activity, but at a much more limited level. Peru’s mining industry remains the sector most heavily impacted by unrest, as roadblocks and targeted attacks upend supply chains of key copper mines. Meanwhile, agricultural production is also seeing substantial impacts from roadblocks.
After the legislature’s initial approval of new presidential and congressional elections for April 2024, there are increasing calls for having elections in December 2023 instead. This February, Congress will once again take up the issue of the electoral timeline.
Our View
An extended period of national protests will dampen private investment and growth in Peru, and the mining sector will be among the most negatively impacted. While protests have been the most violent and disruptive in the south, broader national impacts to confidence levels and economic activity are also apparent. Protesters are calling for the immediate resignation of President Dina Boluarte, but she has broad support from the political establishment and is unlikely to be ousted so long as early elections are officially approved. The most likely exit from the current crisis will stem from a mix of protest exhaustion and the congressional approval of new elections in 2023.
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