Interview: Peru's president-elect needs to tackle poverty, economy, crime

Peru's president-elect Pedro Pablo Kuczynski will have to tackle the challenges of poverty, sluggish economy and rising crime, an economist said here on Tuesday.

"His first challenge is to reduce poverty," Maria Isabel Osterloh from Peru's Economic Research Institute told Xinhua two days before Kuczynski takes office on Thursday.

"During his campaign, many of those supporting Kuczynski were from the southern region, where a great number of people are living in poverty," noted Osterloh.

Some 7 million Peruvians, making up 25 percent of the entire population, live in poverty, according to official figures.

Social programs put in place by the outgoing government of President Ollanta Humala have failed to solve the fundamental problem, said Osterloh.

"Social programs can mitigate poverty, and perhaps reduce it, but they are not sustainable. I believe they have to create more jobs for the population," she said.

"The second challenge is economic growth, keeping in mind that we are going to grow about 3.7 percent," less than the average 5 to 6 percent growth Peru has seen in recent years, as a result of a lower demand for exports, she added.

Alfredo Thorne, Kuczynski's nominated economy minister, said he is concerned about the size of Peru's informal economy, taking up 70 percent of the entire workforce.

Kuczynski's campaign pledges and his experiences in the private sector -- working for international investment banks and a mining company, as well as the World Bank -- have raised hopes he can help jump-start the economy, said Osterloh.

However, promising to cut red tape to help boost economy, Kuczynski will have to face a political opposition that holds an absolute majority in Congress, said the economist.

The Popular Force party, though defeated in the election, could throw a wrench in the new administration's national plans for the 2016-2021 period.

Kuczynski has to seek a pollical coalition, said the economist, adding that "he has to make agreements in a smart way."

Primarily, in a bid to spur economic growth, Kuczynski announced his first official trip would likely be to China, in the hope of promoting Peruvian exports and attract foreign investment.

Thanks to a free trade agreement that took effect in March 2010, China has now become Peru's largest foreign market, with a bilateral trade volume of 14.4 billion U.S. dollars a year.

According to Osterloh, the third challenge is rising crime, one of the factors affecting the country's economic development.

In the past five years, an uptick in street crime has had a negative impact on investment and economic activity in general, she said.

A study by the Lima Chamber of Commerce showed that crime cost the state 6 percent of GDP in 2015, up by 1.5 percent year-on-year.

The first step to improve security is to make Peruvian National Police (PNP) more efficient by bolstering its crime-fighting capabilities, Osterloh believes.

The government needs "to work with the judicial branch" to provide a followup to police work, she added. Endi