Peru's García unpopular despite boom

The first time Alan García was president of Peru from 1985 to 1990, inflation skyrocketed to a cumulative total of more than 2 million percent.

Twenty years later – during his second time in office – Mr. García boasts one of the lowest rates in the region, even while his neighbors suffer under double-digit inflation.

The economic outlook only brightens from there. Peru has seen 84 consecutive weeks of sustained growth, foreign investment is pouring in, and, in a much-heralded announcement, Standard & Poor's this month raised Peru's foreign currency debt rating to investment grade.

García should be one of the most popular presidents of Latin America. Instead, he's one of the least.

Peru's economic boom has buoyed the country, both rich and poor. Poverty is down by 5 percentage points in the past year, to about 40 percent. But the windfall from record mineral prices, textile exports, and foreign investment has fueled wealth much faster than it has reduced poverty – giving rise to resentment, protests, and strikes that many observers say is paving the way for the victory of a hard-line nationalist, like former presidential candidate Ollanta Humala, in Peru's next elections in 2011.

"Inequality is greater than before," says Efrain Gonzales, an economist and vice rector of the Pontifical Catholic University of Peru. And the serious reforms that would bridge divides, particularly for those in the rural Andes who are most cut off from the expansion, have taken a backseat to continuing economic growth, he says. "That is just fuelling more dissatisfaction. If the government does not improve its programs, the problems will get worse, and it's very probable that a candidate like [Mr. Humala] will win."

Earlier this month, the General Confederation of Workers called a national strike to protest García's economic policies and demand that wealth be spread across the country. It was one of a series of strikes in recent months that have been most powerful in the countryside, where poverty is as high as 70 percent.

But the disjuncture is also apparent in the capital, and perhaps no more so than in Gamarra, the garment district of Lima. Textile exports have been booming, and with consumer spending up, pedestrian streets are packed with buyers. On a recent day, men haul rolls of hot pink, red, and baby blue fabric and cart around piles of T-shirts.

But outside the gate, across the street, and down three blocks lives Rosa Huilca, a mother of four whose husband works in a T-shirt factory in Gamarra. The transformation she has seen across the street has not found its way to her doorstep, where up a dank, dark flight of stairs in a huge apartment complex, she lives with her family in a single room with bunk beds. Seven families share the single bathroom down the hall.

"Instead of getting better, life has gotten harder. Everything is more expensive now," says Ms. Huilca. "The president has tricked us."

It is sentiments like this that put García's approval rating at about 26 percent, according to the polling firm Ipsos-Apoyo in Lima, making him both among the least popular in the region and far more unpopular than Humala.

1 | 2

Next