Mining, commerce keep Chile economic expansion robust

Reuters

SANTIAGO, Oct 7 (Reuters) - Chile's economic activity grew arobust 4.1 percent in August compared with a year earlier,buoyed by dynamic retail and mining sectors in the world's No 1.copper producer, the central bank said on Monday.

The growth in economic activity was slightlyhigher than the 4 percent forecast in a Reuters poll but slower than the 5.3 percent rate in July versus the year-earlier month.

However, at a monthly rate the IMACEC economic activityindex jumped a seasonally adjusted 0.7 percent in August againstJuly, racing ahead from a 0.1 percent increase in July againstJune.

"The sectors that again boosted growth, just like lastmonth, were mining and retail, underscoring that consumptionremains highly dynamic in line with the expansion that the labormarket has shown," Credicorp Capital said in a note to clients.

Chile's many shopping malls buzz with shoppers buyinglocally made and imported goods, credit is relatively easy tocome by, and unemployment is at its lowest level since thecurrent methodology for measuring it began in 2010.

Data from Chile's National Statistics Institute (INE) lastweek showed retail sales jumped 12.0 percent on the year inAugust, the strongest growth for that month in two years.

Production of copper, the mainstay of the country's exportsand the backbone of the mining sector, jumped 7.6 percent inAugust from a year earlier, according to INE. It also rose 2.6percent in August versus July. Chile accounts for aboutone-third of the world's production of the metal.

Last year, Chile posted 5.6 percent economic growth. Thecentral bank estimates growth in 2013 will be between 4 and 4.5percent, as investment and exports have cooled, dragged down asthe global economy has wobbled.

But Chile's central bank has maintained a wait-and-seestance regarding monetary policy, in large part because consumerspending has remained strong, though it is showing signs ofmoderating.

The latest data "increases marginally the likelihood that(the central bank's) directors may defer rate cuts further,waiting for clearer signs of moderation in demand and activity,"said Tiago Severo at Goldman Sachs.

All five members of the bank's governing board voted onSept. 12 to keep the benchmark interest rate steadyat 5 percent, where it has been held since a cut in January2012, minutes of that meeting showed.

Traders polled by the central bank last month looked for theinterest rate to remain steady at October's meeting, followed bya 25 basis point cut within three months.(Reporting by Santiago newsroom; Writing by Anthony Esposito;Editing by W Simon)

Rates

View Comments (1)