DUBAI: Peru’s economic growth is likely to be close to 6.1 percent this year but more data is needed before the central bank can make a firm prediction, its president Julio Velarde said yesterday.
“It will be probably close to this,” Velarde told reporters after his presentation at a business seminar in the United Arab Emirates. “We still do not have the full data for May. Then we will decide on the projection.”
Velarde said on May 20 that the central bank might trim its 2013 gross domestic product growth forecast to 5.9 percent or 6 percent from 6.3 percent, when it issues its next quarterly outlook in late June.
Economists have been trimming Peru’s growth forecasts for 2013 after the country posted its first quarterly trade deficit in more than four years. Lower commodities prices are crimping growth in emerging markets like Peru despite growing confidence in the US economy.
Asked whether the central bank considered cutting its benchmark interest rate, unchanged at 4.25 percent for two years, if growth keeps slowing, Velarde said: “Until now we are projecting this interest rate. Of course the bias instead of upwards is downwards.”
He said economic growth would have to be “much below” potential and affect inflation for the central bank to start considering a rate reduction.
Inflation is expected to be “very close” to two percent at the end of the year, mid-point of the central bank’s 1-3 percent target range, Velarde also said echoing his recent remarks. Peru’s current account deficit for the year is seen at 4.4 percent of GDP, he said in his presentation.
The country’s traditional exports — mainly minerals — shrank 19 percent in the first quarter of 2013 from a year ago, while imports grew 6.6 percent on strong domestic demand.
The fiscal surplus for the year is now expected to be 0.7 percent of GDP in 2013, Velarde also said, below the previous central bank’s forecast of one percent. “We are using the finance ministry forecast. It was one percent but there have been decreasing commodity prices so it had affected income coming from mining companies,” he said.
Reuters
