As I follow Peru’s economic trajectory in 2024, one striking paradox continues to unfold: a remarkably resilient economy thriving alongside persistent political instability. This dichotomy has become a defining characteristic of the Andean nation’s development story.
Peru’s economy is expected to grow by 3% this year, outpacing most Latin American neighbors. This performance is particularly notable considering the country has churned through six presidents in just eight years. The latest political tremors came last month when President Dina Boluarte faced impeachment threats after allegations involving undisclosed luxury watches.
“Peru has developed strong institutional guardrails that effectively separate economic management from political volatility,” explains Carlos Montes, senior economist at Lima-based Macroconsult. “The central bank’s independence and the finance ministry’s consistent policies create stability that political chaos hasn’t managed to derail.”
The numbers validate this perspective. Foreign direct investment has remained steady, with over $7 billion flowing into Peru in 2023. The country’s sovereign bonds maintain investment-grade ratings from major agencies, a distinction shared by few Latin American nations.
Mining remains the backbone of Peru’s economic resilience. As the world’s second-largest copper producer, Peru has benefited from strong global demand and favorable commodity prices. The Las Bambas and Antamina mines reported production increases of 8% and 5% respectively in the first quarter of 2024, according to industry data.
I spoke with Sarah Jensen, portfolio manager at Emerging Markets Capital, who oversees $1.2 billion in Latin American investments. “Peru represents what we call ‘institutional resilience’ in emerging markets,” Jensen told me during a recent conference call. “Their technocratic economic management has created a firewall between political drama and economic fundamentals.”
This separation isn’t accidental. Following the hyperinflation crisis of the late 1980s, Peru implemented constitutional reforms that strengthened the autonomy of its central bank and created fiscal responsibility frameworks. These safeguards have withstood multiple political crises.
The economic stability extends beyond macroeconomic indicators. Poverty reduction continues, albeit at a slower pace than pre-pandemic years. The middle class has expanded to nearly 45% of the population, creating a growing consumer market that has attracted international retail and service companies.
However, not everyone benefits equally from this economic resilience. During my recent visit to Villa El Salvador, a sprawling district on Lima’s southern periphery, I encountered a different perspective.
“Politicians fight among themselves while we struggle with rising food prices,” said Elena Quispe, who runs a small textile business. “The economy may look good in statistics, but many of us don’t feel it in our daily lives.”
This disconnect highlights the persistent inequality that characterizes Peru’s economic model. The rural highlands and Amazon regions lag significantly behind coastal urban areas in development indicators.
The tourism sector, which suffered severely during the pandemic and subsequent political unrest, shows signs of recovery. Machu Picchu visitor numbers approached pre-pandemic levels in early 2024, providing vital income to communities in the Sacred Valley region.
Looking ahead, Peru faces several economic challenges despite its resilience. Infrastructure deficits remain significant, with less than 20% of roads paved nationwide. Environmental conflicts surrounding mining projects continue to threaten investment in this crucial sector.
Manuel Rodriguez, former deputy finance minister and current economic consultant, believes Peru’s economic model faces structural limitations. “We’ve maximized the benefits of macroeconomic stability, but the next stage of development requires institutional improvements and investing in human capital,” he explained during our conversation at a recent economic forum in Lima.
International organizations acknowledge this duality. The IMF’s latest report on Peru praised its macroeconomic management while emphasizing the need for reforms to boost productivity and reduce informality, which affects nearly 70% of workers.
As Peru approaches the 2026 presidential elections, investors watch closely for signs that political instability might finally breach the firewall protecting economic stability. For now, the unusual divorce between political chaos and economic performance continues to define Peru’s development path.
In a region accustomed to political turmoil affecting economic performance, Peru stands as a peculiar case study in resilience—a demonstration that with proper institutional safeguards, economies can weather significant political storms.
