(Adds Economy Ministry growth expectation, results of Reuters
poll in paragraphs 2-3)
LIMA May 12 Peru's economic growth in March
will be "quite low" but is unlikely to be negative, after
growing at the weakest pace in more than two years in February,
central bank chief economist Adrian Armas told reporters on a
conference call on Friday.
The government is expected to publish March economic
activity data on Monday. In a statement Friday afternoon, the
Economy Ministry said the economy likely grew around 0.5 percent
year-over-year in March, higher than forecasts in "unofficial
A Reuters poll of nine analysts on Thursday showed median
expectations for a 0.5 percent contraction in March, which would
be the first monthly decline in more than seven years.
The Andean country's economy decelerated in recent months
due to devastating floods in the northern region, linked to an
unexpected coastal El Nino phenomenon. The economy grew 0.74
percent in February from the same month a year earlier, the
weakest pace since late 2014.
Armas added that inflation was likely to re-enter the
monetary authority's target range of 1 to 3 percent in the third
quarter of this year, and that inflation was likely to be
negative for a second straight month in May.
Supply shocks related to the floods and mudslides, which
left more than a hundred people dead and destroyed thousands of
miles of highways, unleashed inflation of 0.32 percent in
February and 1.3 percent in March, the biggest monthly rise in
nearly two decades.
"That is obviously atypical in a low-inflation economy like
Peru's and has to due with an extraordinary phenomenon," Armas
Consumer prices fell 0.26 percent in April as food supplies
recovered from floods, and Armas said a similar pattern was
emerging in May. April's inflation figure brought the annualized
2017 rate to 3.69 percent, down from 3.97 percent in March.
He added that growth would later pick up due to higher
public works spending linked to flood relief, and higher prices
for Peru's main exports. Peru, the world's No. 2 copper
producer, is largely dependent on mining.
On Thursday, the central bank cut its benchmark interest
rate for the first time in more than two years, noting that
growth had decelerated and the economy was performing "below its
Prime Minister Fernando Zavala praised that move on Friday,
saying it would boost activity. Peru expects 3 percent growth
this year after growing 3.9 percent in 2017, one of the highest
rates in Latin America.
(Reporting by Marco Aquino and Teresa Cespedes; Writing by Luc
Cohen; Editing by Chris Reese and Cynthia Osterman)