Business Maverick: In a World Shattered by Virus, a One-Time Rising Star Falls Hard

The outcome is surprising as the South American country has been fighting the pandemic with a textbook anti-virus plan, including a strict quarantine that shut down most industries for two months and an ambitious stimulus plan to cope with the resulting economic contraction.

“Not in my worst nightmares could I have imagined the economy could drop 40% in a month,” said Julio Velarde, whose 14-year tenure at the helm of Peru’s monetary authority makes him one of the world’s longest-serving central bankers. Thousands of firms have gone out of business and mass unemployment could push the poverty rate to its highest in almost a decade, he said.The World Bank projects a 12% contraction for Peru this year, the deepest after Belize and the Maldives.

Six out of every 10 people don’t have a bank account, which slowed down the distribution of cash handouts, and aid for companies, such as cheap loans and tax relief, benefited the minority of firms that operate in the formal economy.Some parties in the opposition-controlled congress have tabled a motion to summon Finance Minister Maria Antonieta Alva and other ministers to congress for questioning. Such interrogations can sometimes lead to a censure vote.

“They shouldn’t have shut everything,” said Angel Arana, who owns a small clothing workshop in downtown Lima. “Lots of businesses could have continued operating during the lockdown just as they’re doing now. The whole population is paying the price of that decision.

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