Peru: As ninth president in a decade, Fujimori underscores entrenched political instability as cracks emerge in economic resilience

Event

Keiko Fujimori appears to have won Peru’s presidential election by a wafer-thin margin, becoming the country’s next president after one of the closest and most polarised runoffs in recent Peruvian history. Her presidency points to a more business-friendly stance, particularly for mining, private investment and fiscal discipline, compared with the potential implications of a far-left presidency under Roberto Sánchez. However, Fujimori will take office with limited political capital, facing a fragmented Congress and the persistent reputational burden tied to her family name, which remains associated with the authoritarian and corruption-tainted legacy of former president Alberto Fujimori, who ruled from 1990 to 2000.

Impact

When Fujimori is inaugurated at the end of July, she will become Peru’s ninth president in a decade – with only three of those elected by the people. This underscores how Peru’s long-standing political instability has deepened in recent years, driven by growing party fragmentation, polarisation and weak accountability. Volatility has long characterised Peru’s political landscape, as illustrated by the fact that every elected president since 1990 has faced corruption investigations. The situation has deteriorated markedly since 2016, however, with a high frequency of presidential removals. Over the past decade, power has increasingly shifted toward Congress, transforming Peru into a de facto parliamentary-style system. Presidents are now highly vulnerable to legislative obstruction and removal, while Congress itself operates with limited accountability.

Although Fujimori’s party is expected to secure the largest representation in the new bicameral Congress, it will fall short of a majority. As a result, she will face the same fragmented and unpredictable political environment that has undermined previous administrations, with numerous small parties, weak discipline and shifting loyalties even within her own party. On paper, the return to bicameralism may slow impeachment proceedings compared to the current unicameral system, but institutional changes, including a powerful Senate that cannot be dissolved, ultimately could make presidential removal easier. Additionally, a Senate design of this kind weakens a key presidential tool to pressure Congress and a crucial presidential check on legislative power. As a result, governability risks shall remain elevated throughout Fujimori’s mandate.

From an economic perspective, Peru continues to demonstrate notable resilience on the surface, although the intensification of political volatility since 2016 has come at a cost. Average economic growth has slowed significantly over the past decade, from 5.9% between 2006 and 2016 to less than half, averaging 2.5% between 2016 and 2026. Looking ahead, growth is expected to remain moderate at around 2.8%, constrained by weak governance, social tensions around mining, rising crime and subdued investor confidence. Additional downside risks stem from climate shocks such as El Niño, which could disrupt key sectors including agriculture and fishing.

Internationally, Fujimori will face a delicate geopolitical balancing act. The Chinese-owned Port of Chancay has become a strategic flashpoint between the United States and China, highlighting Peru’s economic dependence on Chinese trade and investment as the US increases pressure to limit China’s regional influence. While a Fujimori administration may tilt closer towards Washington, a confrontational stance towards China would carry material economic risks.

Peru’s short-term political risk (category 1/7) is stable amid relatively low short-term external debt, continuing favourable conditions on the financial markets, a strong buffer of foreign exchange reserves (around nine months of import cover in January 2026) and historically elevated copper prices, which support the country’s liquidity. The MLT political risk (category 3/7) has a negative outlook in view of the country’s deteriorating institutional indicators.

Analyst: J.Debuysscher@credendo.com