Chile: Economic activity drops in February
April 5, 2017
Economic activity in Chile declined for only the second time in recent years in February, dropping an annual 1.3% according to the Monthly Indicator for Economic Activity (IMACEC) published by Chile’s Central Bank. This contrasted the revised 1.5% expansion observed in February (previously reported: + 1.7% year-on-year) and undershot analysts’ expectations. The strike at the Escondida copper mine, the world’s largest, weighed heavily on the economy, with the mining sector registering a steep contraction. Moreover, matters weren’t helped by the unfavorable base effects of last year’s leap and contraction in the manufacturing sector, while the trade sector saw growth. With strike action at the mine only ending late last month, economic activity for March is also likely to have been depressed as a result.
On a monthly basis, economic activity in February dipped 0.7% in seasonally adjusted terms, compared to a 0.4% rise in January. The overall trend in February consequently pointed downwards, with annual average growth in economic activity tumbling from 1.6% in January to 1.2% in February.
Commenting on the result, Chile’s Economy Minister Rodrigo Valdés said: “the underlying strength of the economy is still between 1.5% and 2.0%, which is the same figure observed in recent months, hence I would encourage everyone to look at the figures in a calm way, because they are strictly one-off factors”.
Author: Oliver Reynolds, Economist