September 14, 2018 / 11:38 PM / a year ago

UPDATE 1-Peru central bank raises view of 2018 current account deficit

(Adds quote from central bank official, context)

By Teresa Cespedes

LIMA, Sept 14 (Reuters) - Peru’s central bank said on Friday that it expects a smaller trade surplus and larger current account deficit this year compared to its previous estimates due to global trade tensions that have lowered prices for the country’s copper and gold exports.

Jorge Estrella, the central bank’s head of economic research, said the bank now expects a current account deficit of 1.6 percent of gross domestic product this year, versus the 1.2 percent previously expected.

The trade surplus, previously seen at $9 billion for this year, will likely be $7 billion, Estrella said. Next year’s trade surplus should be around $6 billion instead of the bank’s previous estimate of $10 billion.

“This is the effect of prices,” Estrella told reporters on a conference call. “With copper and gold trading lower, we’re going to have a smaller surplus.”

Estrella said Peru’s current account deficit this year would still be relatively small. “Many countries in the world would like to have a current account deficit as low as ours. It’s an indicator of very little vulnerability in the Peruvian economy,” he said.

Estrella said the bank does not expect to modify its “expansive” monetary policy because of external factors.

The bank has set the benchmark interest rate at 2.75 percent for the past seven months, as inflation is within its 1 percent to 3 percent target range and economic growth is expected to quicken to about 4 percent this year. (Reporting By Teresa Cespedes)

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