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Peru will likely post first trade deficit in a decade this year -central bank
August 28, 2013 / 4:51 AM / 4 years ago

Peru will likely post first trade deficit in a decade this year -central bank

LIMA, Aug 27 (Reuters) - Peru will likely post a $1 billion trade deficit this year and an $800 million trade gap in 2014 - the first time since 2001 that imports will overtake exports in the Andean country, the central bank said on Tuesday.

In June, the central bank forecast a $485 million trade surplus for this year, but the country’s mineral exports have slumped more than expected on weak global growth, the central bank said in a statement late on Tuesday.

Shipments of minerals like copper, gold and silver make up about 60 percent of export earnings. In 2012, Peru registered a $4.5 billion trade surplus - half the size of the surplus in 2011.

The central bank also cut its view of 2013 economic growth to between 5.5 percent and 6 percent from its earlier estimate of 6.1 percent.

That is roughly in line with the 5.7 percent pace the government now expects for this year, instead of the 6.3 percent expansion it predicted earlier.

Last year, the economy expanded by 6.3 percent, one of the fastest paces in the region.

Analysts consider Peru’s potential growth rate, the fastest the economy can expand without stoking too much inflation, to be around 6 to 6.5 percent.

Peru’s economy in the 12 months through June expanded 5.69 percent - less than expected because of slumping exports and somewhat weaker domestic demand.

“Smaller volume of net exports is the main factor of this slowdown,” said Central Bank President Julio Velarde in the statement.

The slightly weaker economy this year has prompted President Ollanta Humala to vow to ease bureaucratic hurdles to investing.

Peru should post a trade surplus again in 2015, the central bank said, and the economy will probably rebound in 2014 to expand at a 6.4 percent clip on average over three years.

The central bank also said that Peru this year will probably post a current account deficit that equals 4.9 percent of gross domestic product - slightly wider than the 4.4 percent gap it forecast earlier.

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