Peru's economy will likely grow about 6 percent this year, the country's central bank chief said on Friday, beating the bank's official forecast as private and public investment increase on an improved global outlook. The bank is more concerned about above-target inflation as growth picks up steam than a currency that has appreciated 2.2 percent this year, Central Bank President Julio Velarde said.
But 12-month inflation is expected to fall from its current 4.23 percent back into the bank's 1 to 3 percent target range by the end of the year, he said. Consumer prices rose the most in 8 months in March, largely because of supply shocks. "We don't see demand factors until now affecting this scenario of inflation because we are expecting growth to be close to 6 percent," Velarde told analysts and investors on a conference call. That is below the economy's potential growth rate of 6.4 percent, he said. The central bank's latest official estimate for growth was 5.7 percent but Velarde said it would be raised.
Last year Peru's economy grew 6.92 percent, one of the fastest rates in Latin America. Velarde said private sector investment would grow by 10 percent this year, destined mostly for construction and mining. Peru's economy grew a faster-than-expected 7.18 percent in February from a year earlier on double-digit growth in the construction sector and increased government spending.
Public investment has been growing at around 30 percent in recent months, financed by the country's strong fiscal position. Strong growth and heavy dollar inflows have pushed Peru's sol to its strongest level in some 15 years but Velarde said the currency had appreciated less than those of many other Latin American countries and ruled out adopting capital controls.
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