China’s investment in Peru is poised to jump tenfold by as early as 2018, as the Asian nation expands mining and infrastructure projects to bolster its economic growth, according to Finance Minister Miguel Castilla.
“We have the potential to see investment grow tenfold,” Castilla said in an interview in Shanghai. “It will be in mining, energy, petrochemicals and infrastructure, but mining will be the most important sector.”
Chinese investment in Peru, South America’s sixth-biggest economy, is projected to rise this year and next, Castilla said. Investment may grow to $20 billion in the next six to seven years from $2 billion, he said. China is the world’s biggest consumer of industrial metals. Peru is the top silver producer, number three in copper and sixth in gold.
Peru may reach or exceed its economic growth targets for this year, bolstered by domestic demand and a rebound in China in the third quarter, Julio Velarde, president of the central bank, said today in a separate interview from Shanghai. Growth will be 5.8 percent this year, the central bank said in a June 15 report.
“I believe we are going to grow close to 6 percent,” Velarde said. “I am optimistic the slowdown in China will be only in the second quarter and the third quarter it will recover and there won’t be a meltdown in Europe.”
A Chinese statistics bureau report on July 13 is expected to show the economy expanded 7.7 percent in the second quarter, the slowest pace since 2009, according to the median estimate in a survey by Bloomberg.
China announced on July 5 it was cutting interest rates, the second reduction in a month, amid concern Europe’s debt crisis will curb exports. The Shanghai Composite Index fell to a six-month low yesterday after a report showed imports rose less than anticipated in June while export growth slowed.
Peru posted its first trade deficit in more than three years in April as exports dropped 12 percent. China is the top destination for Peru’s overseas sales and accounted for 17 percent of total shipments in the first quarter, according to Comexperu.
Peru is preparing to cut its forecasts for exports and imports for this year because of Europe’s debt crisis and the slowdown in the Chinese and U.S. economies, Castilla said.
“We are in the process of revising our trade figures,” Castilla said. “They will most likely be downside revisions. We will still have a trade surplus this year.”
Castilla and Velarde are part of a delegation of Peruvian government officials on a roadshow across Asia, including visits to Hong Kong and Singapore.
Peru’s trade surplus will narrow to $8.2 billion this year from a record $9.3 billion last year, as growth in imports outpaces the rise in exports, the Finance Ministry said in a May 30 report.
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