(New throughout with comments from central bank president)
By Marco Aquino
LIMA, Sept 16 Peru's central bank on Friday
trimmed its economic growth outlook for 2017 to 4.5 percent
from 4.6 in June, citing uncertainty over new government
policies and the risk of Republican nominee Donald Trump winning
the U.S. presidential election in November.
Central Bank President Julio Velarde said he was unsure of
the economic impacts of reforms proposed by Peru's centrist
President Pedro Pablo Kuczynski, who took office in July and has
asked the opposition-controlled Congress to let him hike the
corporate tax rate and raise infrastructure spending.
"Our forecast for 2017 has its limits because the measures
that will be implemented aren't fully known," Velarde said
during a presentation of the bank's quarterly inflation report.
"We have to see what the impacts are in terms of business
Kuczynski's government has forecast a 4.8 percent growth
rate for 2017, following the 4 percent pace that the central
bank still expects for this year.
Velarde also cited the "smaller risk" to global economic
growth that could impact Peru if Trump, who has promised to slap
steep tariffs on Chinese and Mexican products, wins the U.S.
"There are fears with respect to a kind of trade war in the
case of the United States, due to the threat of tariffs for
China, Mexico and other countries," Velarde said.
But Velarde said the scenario was unlikely, in part because
trade agreements and trade organizations could thwart the
proposals. "A president is not a king," Velarde said.
Velarde has previously said that Trump, who has been gaining
ground against Democratic rival Hillary Clinton in opinion
polls, could trigger a new global economic depression if he does
a fraction of what he has proposed.
Peru's biggest trade partner is now China, not the United
States, and Kuczynski was wrapping up a five-day trip in the
Asian powerhouse on Friday where he sought investments in
refineries, ports and railways in Peru.
Surging production from new copper mines has driven an
economic recovery in Peru after a sharp economic slowdown in
2014 in the wake of the global commodities price bust.
But domestic demand has weakened this year, with
unemployment creeping higher and imports slipping.
Still, domestic demand should improve in 2017, the central
bank said, forecasting a 4 percent expansion after an estimated
1.8 percent this year.
Velarde said the central bank would likely increase rather
than decrease its growth estimates in its next quarterly report
(Reporting By Marco Aquino, Writing By Mitra Taj; Editing by
Chizu Nomiyama, Alan Crosby and Diane Craft)