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Peru again trims 2014 growth forecast, now sees 3.5 pct expansion
October 1, 2014 / 4:38 PM / 3 years ago

Peru again trims 2014 growth forecast, now sees 3.5 pct expansion

LIMA, Oct 1 (Reuters) - Peru’s finance minister on Wednesday called growth this year mediocre and said the economy will likely expand by 3.5 percent or less - below his estimate of “under 4 percent” two weeks earlier.

The government has downwardly revised its estimate for this year’s economic expansion several times from an initial forecast of around 6 percent at the start of the year.

Alonso Segura, who was sworn in as President Ollanta Humala’s second finance minister last month amid the worst economic slowdown in five years, said growth in 2014 will likely be close to the central bank’s new estimate of 3.5 percent.

“We think that, indeed, the figure for growth this year is going to be close to that, close to 3 percent and a bit more, maybe 3.5 percent or a bit less,” Segura said in a televised congressional presentation.

Peru’s economic growth has slowed to its weakest pace since the global financial crisis in 2009, as mining investment and activity have shrunk and exports have fallen on weaker mineral prices and softer demand.

Segura’s new growth forecast for 2014 is closer to the growth rate logged so far this year - 2.98 percent in the first seven months of 2014 from the same period a year ago.

Economic growth in Peru usually picks up at the end of the year on higher public spending.

The government and central bank have said the slowdown likely ended in July, when economic growth picked up slightly to expand by 1.16 percent year on year.

But preliminary government data points to still-tepid growth in August. Mining and hydrocarbon activity shrank 3.51 percent - a deeper contraction than in July. And consumption of cement, a barometer of construction activity, fell for the second month in a row.

Economic data for August will be released on Oct. 15.

On Tuesday Peru’s central bank widened its forecast for this year’s trade deficit to $3.2 billion, the biggest shortfall in at least two decades, and trimmed its growth forecast to 3.5 percent.

Reporting By Patricia Velez and Mitra Taj; Editing by Steve Orlofsky

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