Peru’s economy expanded by nearly 9 percent in the first quarter of this year, and the forecast for the full year is 7 percent, which is slower but will still gives the country one of the strongest growth rates in the world. Exports are growing at a record clip, inflation is within the three-point target for the year, and foreign reserves are close to $50 billion.
Humala won, despite these impressive numbers, because the vast majority of Peruvians – even those who voted for his opponent – do not feel that they have benefitted from 10 years of economic growth.
An antiestablishment election
Hernando de Soto, Peru’s best-known economist and a Fujimori adviser, said that Humala and Fujimori topped the first round of voting in April and competed in Sunday's runoff because average Peruvians want a larger slice of economic growth.
“The two antiestablishment candidates won in April because government policies have not favored the poorest. The past two administrations were caretaker governments, watching only macroeconomic numbers. This is what has led to so much social resentment in the country,” Mr. de Soto said.
Humala’s initial platform called for a much greater state role in the economy in order to distribute the benefits of growth and address the resentment. One plank talks about electricity, water, and natural resources, most of which are run by private companies, as “strategic activities that will be put to use to develop the nation and Peruvians.”
This kind of language terrified the country’s elites and foreign investors, who feared Humala meant to replicate Hugo Chávez’s model in Venezuela. Humala’s opponents painted him as a Chávez clone when he first ran for president in 2006. It worked and he lost. Humala has been distancing himself from Mr. Chávez ever since, and told foreign reporters two days before the vote that the Venezuelan economic and political model was not for Peru.