Chile’s economy surged in the fourth quarter as increases in mining output and investments set the stage for continued growth going forward.
Gross domestic product grew 1.3 percent in the fourth quarter, up from a revised 0.2 percent expansion in the three months through September. The economy expanded 3.6 percent from the fourth quarter of 2017 and 4 percent for the full year of 2018, the central bank said in a report published on its website Monday.
The numbers indicate Chile’s economy is shaking off a slowdown marked by weak consumer demand and stubbornly high unemployment. Chilean policy makers have also had to contend with a trade feud between their largest trade partners, the U.S. and China, which has held down prices of copper, the country’s main export. Still, rising investments are expected to help power growth going forward.
Copper production, which represents about half of Chile’s exports, rose to a monthly record in December
“The message here is that the recovery is consolidating gradually and the leading indicators point to a decent growth in the first part of the year and more robust in the second, assuming that the trade war between the U.S. and China ends,” said Andres Abadia, senior international economist at Pantheon Macroeconomics.
In the fourth quarter, total mining output increased 3.1 percent from the previous three-month period and 1.3 percent from a year-ago. Investments rose 5.6 percent and consumer expending expanded 3.6 percent, respectively, compared to the the fourth quarter of 2017.
Chile’s economic recovery has been significant and investments will improve further in 2019, Finance Minister Felipe Larrain told reporters in Santiago after the fourth quarter data was published.
Copper production, which represents about half of Chile’s exports, rose to a monthly record in December. State-owned Codelco’s quarterly output also reached the highest levels for 2018 in the final three months of the year, according to a report by Chile copper commission Cochilco.
What Bloomberg’s economists say
“Seasonally adjusted figures show broad and strong economic growth in the fourth quarter, consistent with a narrowing output gap. Results support expectations for activity to continue rising in 2019, albeit at a more moderate pace.”– Felipe Hernandez, Latin America economist.
Chile’s central bank will hold its next monetary policy meeting on March 29. Annual inflation has slid below the lower limit of the official target range, increasing bets that policy makers will be in no hurry to raise borrowing costs after starting a tightening cycle last year.
(By Daniela Guzman)
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