Keiko Fujimori's victory: Peru's best chance for political stability

 Keiko Fujimori's victory: Peru's best chance for political stability

Peru has endured one of the most turbulent political periods in Latin America over the past decade. Since 2016, the country has had six presidents. Four former presidents have either been impeached, removed from office or forced to resign, while three have spent time in jail.

Against this backdrop, the election of Keiko Fujimori offers Peru its strongest opportunity in years to restore political stability.

Unlike her immediate predecessors, Fujimori is a seasoned political insider. She has spent nearly two decades at the centre of Peruvian politics and understands the complex relationship between the presidency, Congress and Lima's political establishment. This stands in sharp contrast to Pedro Castillo, the left-wing rural schoolteacher who unexpectedly won the presidency in 2021. Castillo entered office with little political experience and struggled to manage Congress or build alliances within the political establishment. Surrounded by poor advisers, he made a series of disastrous political decisions that culminated in his impeachment and arrest. Such political missteps are far less likely in Fujimori's case. She knows the rules of Peru's political game and has often been one of its principal players.

Ironically, however, her own party, Fuerza Popular, bears considerable responsibility for the very political instability that has plagued Peru. Although Fujimori narrowly lost the presidential elections in 2011, 2016 and 2021, her party remained the largest force in Congress throughout those years. It repeatedly used its parliamentary strength to weaken governments that lacked legislative majorities, contributing to the collapse of successive administrations. Had Fujimori lost once again, Peru might well have faced another cycle of confrontation and instability.

Fujimori has learnt important lessons from her three presidential defeats. She is acutely aware that her latest victory was hard fought and achieved by the narrowest of margins. Although she finished first in the opening round of this year's election, she secured only 17 percent of the vote, underscoring the fragmented nature of Peruvian politics. Such a limited electoral mandate is likely to encourage pragmatism, coalition-building and moderation rather than ideological confrontation.

She has also learnt hard lessons from the dramatic rise and equally dramatic fall of her father, Alberto Fujimori. His presidency restored macroeconomic stability and defeated the Shining Path insurgency, but it ultimately collapsed under the weight of authoritarianism and corruption. Having witnessed both the achievements and failures of that era at close quarters, Keiko Fujimori is likely to adopt a more mature  and institutionally cautious style of governance.

Her political position is considerably stronger than that of most recent presidents. In the congressional elections held alongside the presidential poll, Fuerza Popular emerged as the largest party in both chambers. It won 22 of the 60 seats in the Senate and 43 of the 130 seats in the Chamber of Deputies. Although short of an outright majority, these numbers place Fujimori in a strong position to build legislative coalitions with other centre-right and centrist parties.

These political advantages give her a better chance than any recent Peruvian president of completing a full five-year term. If she succeeds, Peru could finally regain the political stability that has eluded it for much of the past decade.

One of her most pressing challenges will be tackling the surge in crime and violence. Drug trafficking organisations and criminal gangs have expanded their influence during years of political uncertainty and weak governance. Restoring public security will be among the first and most important tests of her administration.

Ironically, while Peru's politics has been highly unstable, its economy has remained one of Latin America's strongest performers. Despite repeated political crises, the economy has demonstrated remarkable resilience, consistently outperforming its political system. Sound macroeconomic management has kept inflation below three percent, public debt at around 33 percent of GDP—low by Latin American standards—and international reserves at comfortable levels.

The country's independent central bank has been a pillar of stability under Julio Velarde, who has served as governor since 2006. Remarkably, he has outlasted ten Peruvian presidents and has been reappointed by governments of both the Left and the Right. His continuity has provided an institutional anchor rarely seen elsewhere in the region.

Peru has retained its investment-grade credit rating despite prolonged political turmoil. The economy grew by 3.4 percent in 2025, driven by robust mining exports and favourable international prices for copper and other minerals. Peru is the world's third-largest producer of copper and a major producer of gold, silver, zinc and molybdenum. Mining contributes around 10–15 percent of GDP, generates about 60 percent of export earnings and accounts for a significant share of government revenue.

Some Western commentators, including The Economist, have interpreted Keiko Fujimori's victory as part of a broader "Trumpification" of Latin America. This is simplistic and misleading. The comparison overlooks the distinct domestic factors behind Fujimori's victory as well as those of  other right wing leaders in Latin America in recent years. Fujimori has neither cultivated close political ties with Donald Trump nor sought to emulate his confrontational style of politics. Her election was driven exclusively by Peru's internal political dynamics.

More importantly, Peru's political environment leaves little room for Trumpian extremism. Governments that ignore the concerns of poorer rural populations have repeatedly faced mass protests and political upheaval. Fujimori is therefore more likely to govern pragmatically than ideologically, balancing market-oriented economic policies with the political necessity of maintaining social stability.

The addition of political stability under Presidency of Fujimori to the already strong economic fundamentals means that Peru could enter a new phase of higher economic growth and prosperity.

That would also benefit India, whose economic relationship with Peru has expanded rapidly. India's exports to Peru reached US$1.15 billion in 2025–26, with considerable potential for further growth. Peru's exports to India amounted to US$8.87 billion, led by gold (US$8 billion) and copper (US$730 million). Bilateral trade reached US$10.02 billion, making Peru India's second-largest trading partner in Latin America after Brazil. India has also emerged as Peru's third-largest export destination globally, after China and the United States.

Yet India's trade policy has not kept pace with the growing importance of Peru. India's exports to Peru, at US$1.15 billion, are more than double its exports to New Zealand (US$567 million), while total bilateral trade with Peru (US$10.02 billion) is nearly nine times larger than that with New Zealand (US$1.16 billion). Despite this, India concluded a Free Trade Agreement with New Zealand through rapid conclusion of negotiations in 2025–26, while negotiations for the India–Peru Trade Agreement, which began in 2017, are still dragging on despite nine rounds of talks. On 5 July 2026, India's Commerce Minister, Piyush Goyal, remarked that the agreement was "unlikely to conclude soon.” It is a pity. Given the scale of bilateral trade and potential, the India-Peru FTA deserves far greater attention and urgency.