Domestic demand boosts Peru's economy in 2012 -IMF

* IMF says economy to grow 6.3 pct this year

* Peru on track to lead Latin America in growth

WASHINGTON, Dec 19 (Reuters) - Peru's economy should grow 6.3 percent this year, close to its potential, as domestic private investment offsets softer prices for exports, the International Monetary Fund said on Wednesday.

The pace of growth, in line with government forecasts, means Peru is on track to be the fastest-growing economy in Latin America.

Still, the country faces risks from trade shocks in the future that could reduce exports, investment and growth, as well as from capital inflows that could overheat the economy, IMF staff said after their annual visit to the country.

"Monetary policy should continue to be neutral if underlying inflation remains subdued and expectations well-anchored," the IMF said. It also called on the country to have a more flexible exchange rate to deal with a widening current account deficit.

Peru posted a trade surplus in October, the latest figure available, but it was 95 percent lower than a year earlier due to surging imports and lower prices for metals exports.

The IMF mission also said Peru should take advantage of generally high commodity prices to invest in infrastructure and make sure mining wealth is spread out fairly across generations.

(Reporting by Anna Yukhananov; Editing by Peter Galloway)