On February 5, 2025, the Inter-American Dialogue hosted a public event examining Peru’s political and economic trajectory as the country approaches its April 2026 election—a moment that offers the potential for political stability and democratic renewal. The discussion, moderated by Dialogue senior fellow Michael Shifter, explored Peru’s internal challenges and external pressures in the context of persistent vulnerabilities and shifting global dynamics.
Dialogue president & CEO Rebecca Bill Chavez opened the session by outlining Peru’s dual narrative. While the country has benefited from two decades of economic growth—driven by its rich natural resources and robust trade ties—recent slowdowns in 2023 and 2024 have exposed underlying structural weaknesses. These include low productivity, pervasive corruption, and rising insecurity. Chavez also highlighted China’s deepening economic presence in Peru, exemplified by the Chancay port project, which has drawn significant attention from Washington.
Luis Miguel Castilla, former minister of economy and finance of Peru and current executive director of Videnza Instituto, presented an optimistic but measured assessment of Peru’s economy. He noted that strong macroeconomic fundamentals—characterized by low inflation, a stable central bank, and an open trade policy alongside a mining sector benefiting from high commodity prices have helped sustain growth despite a turbulent political environment. Evidence of this resilience includes Peru’s foreign direct investment (FDI) levels, which exceed the regional average. However, Castilla also pointed to growing concerns among citizens and investors regarding illegal mining, transnational organized crime, and continued political instability.
Cynthia McClintock, professor of political science and international affairs at George Washington University, offered a diagnosis of Peru’s chronic political instability. Despite a relatively strong economy, Peru’s democratic institutions are under strain, with record-low satisfaction ratings and widespread public discontent. McClintock echoed Castilla’s concerns, noting that many politicians are associated with corruption or even complicity in organized crime. She emphasized that ineffective law enforcement and a fragmented party system have eroded public trust and fueled a growing desire among Peruvians to emigrate.
Kellie Meiman Hock, senior counselor at McLarty Associates and an Inter-American Dialogue board member, examined external pressures shaping Peru’s future, particularly the implications of evolving U.S. trade policies and tariff threats. She explained that while Peru currently enjoys a trade surplus with the United States—which offers some insulation from aggressive tariff measures—uncertainty looms as the U.S. administration reviews free trade agreements (FTAs). She highlighted that U.S. tariffs are increasingly being used not only to protect domestic industries and generate revenue but also as geopolitical leverage. She also discussed the implications of Chinese investments in Peru’s infrastructure and energy sectors, noting that any shift in U.S. policy could force Latin American nations like Peru to reassess their strategic economic partnerships.
Looking forward to Peru’s political future, both McClintock and Castilla expressed concerns about the rising popularity of outsider candidates amid increasing political polarization and fragmentation. McClintock noted that after multiple elections characterized by low voter satisfaction and a proliferation of parties, many Peruvians appear willing to support a strong, even authoritarian leader who promises order and decisive action. Castilla added that the situation could be further influenced by external pressures—particularly if U.S. policies on trade and security become more assertive, potentially encouraging a tilt toward more pro-American policies and a cooling of Chinese involvement. As Peru edges closer to its next election, the outcome will determine whether the country can chart a more stable and reform-oriented path or risk further democratic decay.