Apr 9, 2016 | 17:31 GMT

2 mins read

A Slowing Economy Will Burden Peru's Next Leader

A Slowing Economy Will Burden Peru's Next Leader

Peruvians will go to the polls April 10 to elect a new president. Among the field of candidates, Keiko Fujimori, daughter of former Peruvian president Alberto Fujimori, holds the advantage. According to a recent poll, she has the support of 34 percent of voters, compared with around 15 percent for centrist Pedro Pablo Kuczynski and 13 percent for leftist Veronika Mendoza. No candidate is expected to receive enough votes on election day to win outright, and the presidency will be decided in a runoff in June. Regardless of who wins, the country's next leader will struggle to usher in major political or economic changes.

The impasse lies in the nature of the Peruvian political system. Parties quite often center around individuals, and as a result the political landscape is fragmented. It is often difficult for parties to obtain enough votes in congress to impose legislative changes. In recent months, the Broad Front party's Mendoza has made political gains, raising concerns that, if elected to office, she would forcibly renegotiate natural gas export contracts and could rescind Peru's participation in the Trans-Pacific Partnership trade agreement. But that outcome is difficult to envision.

Even if Mendoza overcomes both Kuczynski and Fujimori, her rhetoric will be difficult to turn into policy. Peru's robust mining, agricultural and fisheries export system is appealing to investors, attracting more than $8.75 billion in foreign direct investment in 2015. The Peruvian political establishment is likely wary of Mendoza's contract renegotiation idea, fearing that it might scare off foreign investment. Given Mendoza's relatively low polling numbers and the competition from other parties, Broad Front might not win the required seats to implement those policies. Well established parties, such as Fujimori's Popular Force, and the upstart Peruvians for Change are also in the running for congressional seats and could make significant electoral gains.

After the election, the president's main task will likely be to manage the slowing Peruvian economy. Peru relies heavily on mineral exports, and the faltering global commodities market has driven its gross domestic product growth rate down from 9.1 percent in 2008 to around 2.8 percent in 2015. The slow economic growth will likely continue for several years while China, Peru's main export market, retools its economy. Periodic risk of social unrest among the country's rural population, who could protest against mining interests or controversial legislation, could be another challenge for the next leader.

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