Lower copper prices take their toll

23 September 2018

The falling price of minerals (principally copper) on world markets is forcing the Central Bank (BCRP) to recalculate downwards its expectations for the trade balance and for next year’s growth rate.

In June, the BCRP estimated that the trade surplus this year would be just over US$9 billion; it has since amended this expectation downwards to just under US$7 billion. The trade surplus for the year to August was US$8.2 billion.

A 1% fall in the value of traditional exports (of which minerals are by far the most important category) will be, at least in part, offset by an increase in non-traditional exports, chiefly agricultural products.

The BCRP’s projection for the trade surplus next year sees an even sharper fall. Back in June, the Bank thought that it would reach over US$10 million, but it now thinks it will be around US$5.7 billion. Lower projected world demand will affect both traditional and non-traditional exports.

So far as growth is concerned, the BCRP is now expecting growth of 4% in 2019, roughly the same as this year, whereas previously it expected the economy to expand by 4.2%.

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