Political Instability in Peru: Navigating Risks and Unlocking Opportunities in Resilient Sectors

Peru's political landscape in 2025 remains a volatile cocktail of institutional erosion, public distrust, and economic fragility. President Dina Boluarte's administration, mired in a 93% disapproval rating, has faced relentless scrutiny for its authoritarian-leaning policies, including legislative overhauls that undermine judicial independence and suppress dissent. Yet, amid this turbulence, Peru's economy has demonstrated surprising resilience in key sectors, offering foreign investors a paradoxical opportunity: to navigate high-risk environments while capitalizing on sectors insulated from political shocks.

Assessing Risk Exposure: A Fragile Political-Economic Ecosystem

Peru's political instability is not merely a governance issue—it is a systemic threat to long-term investment. The government's alliance with right-wing and fujimorista forces has enabled reforms that weaken anti-corruption mechanisms, such as the redefinition of “organized crime” to exclude corruption-related offenses. States of emergency, deployed to quell protests, have further eroded civil liberties, with human rights groups documenting disproportionate use of force. These actions have fueled public disillusionment, exacerbating social unrest and deterring foreign capital.

Economically, Peru's recession and rising poverty rates (28% of the population under the poverty line in 2023) compound the risks. The government's focus on political survival over economic reform has left critical sectors like mining and agriculture vulnerable to bureaucratic delays and social conflicts. For instance, a $64 billion pipeline of mining projects remains stalled due to unresolved tensions with local communities and regulatory bottlenecks.

However, macroeconomic buffers—low public debt (30% of GDP), $79.2 billion in international reserves, and an investment-grade credit rating—provide a safety net. These factors, combined with Peru's strategic role in global supply chains, suggest that while risks are acute, they are not insurmountable for investors with a long-term horizon.

Resilient Sectors: Where Opportunity Meets Stability

1. Mining: The Backbone of Economic Resilience

Peru's mining sector, accounting for 20% of GDP, has shown remarkable resilience despite political headwinds. Copper and gold prices, driven by the global energy transition, have surged in 2025, with mining activity rising 1.4% year-on-year. Peru's status as the world's second-largest copper producer positions it to benefit from the growing demand for critical minerals in electric vehicles and renewable energy infrastructure.

Strategic Insight: Investors should focus on companies with strong ESG (Environmental, Social, and Governance) frameworks, as these are better equipped to navigate social conflicts and regulatory scrutiny. For example, could provide insights into sector-specific risks and opportunities.

2. Agriculture: A Buffer Against External Shocks

Despite a 10% U.S. tariff on Peruvian agricultural exports in April 2025, the sector remains a cornerstone of economic stability. Strong domestic and international demand for fruits like avocados and blueberries has offset trade barriers, with exports to Asia and Latin America growing steadily. Peru's agricultural diversity and arable land advantage make it a strategic player in global food security.

Strategic Insight: Diversified agribusiness investments, particularly in climate-resilient crops, could hedge against trade policy volatility.

3. Infrastructure: A Catalyst for Growth

The launch of the Chancay Port Terminal in June 2025 exemplifies Peru's infrastructure-driven growth strategy. Expected to contribute 1.8 percentage points to GDP in 2025 and create 7,000 jobs, such projects are critical for unlocking stalled mining and agricultural potential. The government's push to streamline permitting and reduce regulatory burdens further enhances the sector's appeal.

Strategic Insight: Public-Private Partnership (PPP) opportunities in transportation and energy infrastructure offer high returns for investors willing to navigate political risks.

Investment Advice: Balancing Caution and Opportunity

For foreign investors, Peru's 2025 environment demands a dual strategy:
1. Risk Mitigation: Prioritize sectors with strong demand drivers (e.g., mining, agriculture) and diversify across asset classes to hedge against political volatility. Sovereign bonds and blue-chip equities in resilient sectors can provide stability.
2. Strategic Entry: Target infrastructure projects with clear government backing and ESG-aligned mining ventures. Due diligence on local partnerships and community engagement is critical to navigating social conflicts.

Conclusion: A High-Risk, High-Reward Proposition

Peru's political instability is a double-edged sword. While it poses significant risks to institutional credibility and investor confidence, the country's macroeconomic resilience and strategic sectors offer compelling opportunities. For investors with a long-term perspective and risk appetite, Peru's volatile landscape may yet yield substantial rewards—provided they navigate it with caution, adaptability, and a focus on sectors insulated from political turbulence.