(Adds details on sector activity, outlook)
By Teresa Cespedes
LIMA, May 22 (Reuters) - Peru’s central bank on Friday slashed its view of this year’s economic expansion to 3.9 percent from 4.8 percent forecast in January on dampened expectations for construction projects and investments.
The central bank also cut its economic growth outlook for next year to 5.3 percent from 6 percent, the bank said in a biannual report.
Peru’s growth rate slowed sharply last year to 2.35 percent as its mineral exports tumbled and investments fell. The mining-fueled economy repeatedly missed official forecasts for a recovery over the past year but grew by a better-than-expected 2.68 percent in March from a year ago.
The central bank now expects a slightly stronger rebound in mining activity this year than it did in its January report - up 6.8 percent instead of 6.3 percent.
But construction will likely only rise 1.9 percent, down from a previously forecast 5.7 percent, in part because of stalled public works in provinces following local elections late last year.
Public investments will probably grow just 4 percent this year instead of 12 percent, said the bank, while private investments will likely rise 1 percent instead of 3 percent.
Hydrocarbon activity will likely drop by 5.2 percent this year on the oil price slump, the bank said, and manufacturing activity will probably rise by 2.3 percent instead of 3.7 percent.
The central bank also cut its view of this year’s trade deficit to $1.69 billion from $2.8 billion as it trimmed its forecast for imports by $900 million.
The current account deficit will likely be 3.9 percent of gross domestic product this year, the bank said.
The monetary authority said it is still expecting inflation to cool to around 2 percent this year and the government to post a fiscal deficit equal to 2.0 percent of GDP.
Reporting by Teresa Cespedes; Writing by Mitra Taj; Editing by Jeffrey Benkoe, Grant McCool and Bernard Orr