(New throughout with comments from central bank president)
By Marco Aquino
LIMA, Sept 16 (Reuters) - Peru’s central bank on Friday trimmed its economic growth outlook for 2017 to 4.5 percent from 4.6 in June, citing uncertainty over new government policies and the risk of Republican nominee Donald Trump winning the U.S. presidential election in November.
Central Bank President Julio Velarde said he was unsure of the economic impacts of reforms proposed by Peru’s centrist President Pedro Pablo Kuczynski, who took office in July and has asked the opposition-controlled Congress to let him hike the corporate tax rate and raise infrastructure spending.
“Our forecast for 2017 has its limits because the measures that will be implemented aren’t fully known,” Velarde said during a presentation of the bank’s quarterly inflation report. “We have to see what the impacts are in terms of business confidence.”
Kuczynski’s government has forecast a 4.8 percent growth rate for 2017, following the 4 percent pace that the central bank still expects for this year.
Velarde also cited the “smaller risk” to global economic growth that could impact Peru if Trump, who has promised to slap steep tariffs on Chinese and Mexican products, wins the U.S. election.
“There are fears with respect to a kind of trade war in the case of the United States, due to the threat of tariffs for China, Mexico and other countries,” Velarde said.
But Velarde said the scenario was unlikely, in part because trade agreements and trade organizations could thwart the proposals. “A president is not a king,” Velarde said.
Velarde has previously said that Trump, who has been gaining ground against Democratic rival Hillary Clinton in opinion polls, could trigger a new global economic depression if he does a fraction of what he has proposed.
Peru’s biggest trade partner is now China, not the United States, and Kuczynski was wrapping up a five-day trip in the Asian powerhouse on Friday where he sought investments in refineries, ports and railways in Peru.
Surging production from new copper mines has driven an economic recovery in Peru after a sharp economic slowdown in 2014 in the wake of the global commodities price bust.
But domestic demand has weakened this year, with unemployment creeping higher and imports slipping.
Still, domestic demand should improve in 2017, the central bank said, forecasting a 4 percent expansion after an estimated 1.8 percent this year.
Velarde said the central bank would likely increase rather than decrease its growth estimates in its next quarterly report in December.
Reporting By Marco Aquino, Writing By Mitra Taj; Editing by Chizu Nomiyama, Alan Crosby and Diane Craft