(Recasts lead, folds in other forecasts and announcements)
By Patricia Velez and Teresa Cespedes
LIMA, April 25 Peru will likely post a trade
deficit of about $1 billion in 2014 as imports outpace the
global miner's exports for a second straight year and the
economy expands less than expected, officials said on Friday.
The mineral-rich Andean country's exports of copper, gold
and silver are not seen rebounding to levels Peru enjoyed during
a decade-long mining boom, when the average annual trade surplus
topped $5.5 billion.
At the same time, imports in the fast-growing emerging
economy continue to surge as the middle class broadens and
domestic demand remains strong.
Peru posted a $365 million trade deficit last year, its
first negative gap since 2001.
The finance ministry doubled its estimate for this year's
trade deficit to $1.03 billion from its August forecast of a
$485 million deficit. And the central bank flipped its December
view of a $40 million trade surplus to a $945 million deficit.
Mining makes up about 60 percent of Peruvian exports and 15
percent of gross domestic product.
The finance ministry said it expects exports to be limited
in part because of a lower price for gold.
Peru is the world's sixth biggest exporter of gold, and
third largest exporter of copper and silver.
The updated trade balance forecasts follow lower estimates
for 2014 growth recently given by the central bank and the
finance ministry - 5.5 percent and 5.7 percent respectively,
down from their shared forecast of 6 percent last year.
The central bank said it cut its growth outlook because
mining activity in 2014 now looks less robust than before.
CENTRAL BANK UNLIKELY TO LOWER RESERVE REQUIREMENTS IN MAY
Central Bank President Julio Velarde said the monetary
authority will probably not lower reserve requirements in May
for commercial bank accounts held in the local sol currency as
it has in previous months.
The bank has trimmed reserve requirements to boost liquidity
every month since November, when it cut the benchmark interest
rate by 0.25 percent and did not loosen reserve rules.
Velarde said he thinks that an "adequate" level of soles is
now flowing through the economy.
"We are not thinking of lowering reserve requirements in
May," Velarde told reporters.
In the past, Velarde has said he prefers loosening reserve
rules more instead of cutting the interest rate again if he felt
the need to encourage growth and inflation was not a concern.
Last year the economy grew 5 percent, or 5.6 percent if a
new method for calculating gross domestic product were used, as
the country's key mining exports tumbled and domestic demand
Velarde also said on Friday that the central bank expects
annual inflation by the end of 2014 to be 2.5 percent or 2.6
percent - higher than its December estimate of 2 percent.
The finance ministry also raised its view of inflation in
2014, to 2.8 percent from the 2 percent rate estimated in
Annual inflation cooled to 3.38 percent in March, still
above the central bank's 1 percent to 3 percent target for the
third straight month.
Earlier this week, Velarde deflected rare criticism of his
handling of the economy from the country's finance minister, who
said the central bank was intervening too much in the local
currency market and not doing enough to prepare for a potential
Prime Minister Rene Cornejo said on Friday that the
government respects the autonomy of the central bank, and that
the finance minister was not pressing for policy changes.
(Reporting By Patricia Velez, Writing by Mitra Taj; Editing by
W Simon, J Benkoe and Andrew Hay)