The president, Alan Garcia of the centre-left Partido Aprista Peruano (Apra), took office in July 2006 for a five-year term. Mr Garcia’s approval ratings have rebounded following the government’s effective response to a massive earthquake that hit southern Peru in August. Having gained the backing of the country’s business sector, something he did not have during his disastrous first term (1985-90), Mr Garcia will continue to implement the investor-friendly policies of the past decade. However, governability will be constrained by the ruling party’s minority position in the legislature, where alliances are fragile. Strong fiscal revenue growth will provide scope for him to implement his social policies, but will also raise expectations. Economic growth will be driven by rising real incomes, investment related to the Camisea natural-gas project and growing exports of minerals, textiles and agricultural produce. Vigilant monetary policy will help to keep year-end inflation anchored around the 2% target set by Banco Central de Reserva del Peru (the Central Bank). The current account will see a narrowing surplus in 2008 and move into deficit in 2009.