Peru Forecasts Biggest Trade Deficit Since 1998 on Metals SlumpJohn Quigley
Peru will posts its widest trade deficit in 15 years in 2013 after a drop in metal exports, dimming the outlook for economic growth, the government said.
Exports will fall 8 percent to $42 billion, resulting in a $720 million trade gap, the Finance Ministry said in a report published in state newspaper El Peruano today. The Andean nation had a $4.5 billion surplus last year.
The price of copper, which accounts for about a quarter of Peru’s exports, has dropped 9.6 percent this year, damping private investment in the world’s third largest exporter of the metal. The economy expanded 4.4 percent in June, the second slowest pace in more than three years, while the Peruvian sol has dropped 9.2 percent against the dollar in 2013.
Reduced Chinese demand has “prompted a significant fall in the prices of the raw materials we export,” Finance Minister Miguel Castilla said in Congress today. “The data we see allows us to say 2014 will be better. The world should keep recovering.”
Stronger global growth and Peru’s increased copper production will fuel a rebound in exports next year, Castilla said.
The government forecasts the economy will expand 5.7 percent in 2013 and about 6 percent next year, the fastest in South America. The mining and hydrocarbons industries will each expand 10 percent in 2014.