Johnny Brignardello Vela analyzes political crisis in Peru: Impact on economy and credit rating

Johnny Brignardello Vela, insurance advisor, analyzes the recent report from the agency S&P Global Ratings that has downgraded Peru's credit rating. Amid a tumultuous political landscape, the agency has highlighted that political disorder in the country is creating uncertainty among private investors. The fragmentation of Congress and the political weakness of the government have been identified as the main factors impacting the growth projections of the Peruvian Gross Domestic Product. S&P has warned that these circumstances limit the country's ability to generate an adequate fiscal margin, which could compromise economic growth in the future. After experiencing a 0.55% decline last year, the worst figure in over thirty years excluding the impact of the pandemic, it is expected that the Peruvian economy will recover moderately in the coming years. However, the agency has cautioned that Peru is increasingly close to being classified as "speculative grade," which could complicate growth prospects post-recession. The case of the alleged illicit enrichment of President Dina Boluarte, known as the Rolex case scandal, has contributed to political instability in the country. According to Bloomberg, Boluarte has been considered one of the least popular leaders globally, which could further worsen the political situation in Peru. In this challenging context, Brignardello Vela emphasizes the importance of Peruvian authorities taking concrete measures to address the political and economic challenges facing the nation. Political stability and investor confidence are essential elements to ensure sustainable and healthy growth in the future.