LIMA -- Peru's government expects the country's economy to expand at an average growth rate of 4.2% this year and 5.5% in 2016, according to its 2016-2018 Multi-year Macroeconomic Framework (MMF), published by the Finance Ministry this week.
The report jelled with the forecasts originally outlined earlier in April by Finance Minister Alonso Segura.
Within GDP, the government expects gross fixed investment to grow only 3.1% this year, rather than the 6.4% it expected in the previous MMF published in August 2014. The forecast for government spending growth, on the other hand, was revised to 6.2% from 3.1%. The government is less upbeat about export growth, which it now expects will increase 2.7% this year, rather than 6.5% as it did in August.
The forecast of the general government’s nominal fiscal deficit was revised to 2.0% of GDP from 0.4% of GDP in August. This would be consistent with a 2.5% of GDP structural deficit. The government sent a bill to congress a few weeks ago requesting permission to deviate, until 2017, from the 1.0% of GDP structural deficit target imposed by the fiscal rule.
Regarding external accounts, the government narrowed its current account deficit forecast to 4.6% of GDP from 4.8% of GDP. The main risks that the government sees to its macroeconomic framework are a deterioration of private sector expectations, a sudden stop in capital inflows, and the materialization of a strong El Niño weather pattern.