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Peru's García unpopular despite boom

President Alan García presides over one of the region's fastest growth rates, but his approval rating sank to 26 percent this week because the poor say their lives aren't any better.

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"We are growing at the macroeconomic level, and it has caused an overflow of expectations," says Humberto Campodonico, an economist in Lima. "Many feel the government is just favoring the rich and the investors."

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There are other reasons that people are unhappy. Unemployment is down, but underemployment remains rampant, at about 40 percent of the population, says Mr. Gonzales.

While government coffers are full, a lack of efficiency and human capital has hindered infrastructure projects that would connect rural areas to the modern economy.

The government has attempted to address rising resentment, pledging to reduce poverty to 30 percent by 2011, says Javier Barreda Jara, the viceminister of Social Development, and slash child nutrition. Social spending is up, he says, but he concedes that inefficiency at the regional and local level has contributed to an unequal distribution of wealth. "The people don't yet perceive [an improvement]," he says.

But many say the government is not giving attention to real reforms – including in justice, health, education, and security. Instead, some say, the government is single-mindedly focused on keeping the economy, expected to grow by 9 percent this year, roaring ahead. "The government expects economic growth to solve all these problems," says Jorge Gonzalez Izquierdo, a researcher at Pacific University in Lima and a former Minister of Labor. "But the fight against poverty is not only a market matter."

Marlene Tame, who sells gelatin outside the walls of Lima's garment district, says that grocery bills are no longer viable because of the price of eggs, milk, and bread. "They say everything is so good with the economy, meanwhile the people are dying of hunger," she says.

García, who implemented price controls in the 80s, has maintained a tighter monetary policy, and toured the country emphasizing his message that an investment grade helps the poor too, that food inflation is a result of global price spikes, and that anti-system leaders such as Humala are seeking to polarize the situation for their own political gain.

Still, problems are likely to get worse for García, who has not been able to shake his old reputation as the president of hyperinflation. Prices go up even slightly, says Gonzales, and "people see the Alan García of 1985. His problem is erasing his image as the populist, inflationist president."

And while he has changed his economic policies, he has also changed his style, says Alfredo Torres, the president of Ipsos-Apoyo.

He is no longer the populist who once hugged voters for the cameras. "In some aspects he has changed for the better, and in others for the worse," says Mr. Torres. "He is more arrogant and distant. His personality is not the best to give poor people a sense that the president is worried about them."

If Peru is Latin America's rising star, its advances could be rolled back by politics.

"That is what sets Peru apart from countries like Brazil and Chile, which are also doing well economically but that enjoy far more political stability and certainty," says Michael Shifter, vice president for policy at the Inter-American Dialogue in Washington. "In Peru, the contradictions are more acute."