Chile Economic Activity July 2016


Chile: Economic activity expands tepidly in July as mining sector continues to shrink

September 5, 2016

In July, economic activity rose a meagre 0.5% over the same month last year, according to the monthly indicator for economic activity (IMACEC). The figure marked a slowdown over June’s 1.0% expansion and represented the slowest pace of growth in nearly two years. It also fell short of market expectations of a faster 1.2% increase. According to the Central Bank, July’s slowdown mainly reflected that modest growth in services and retailing was partly offset by contractions in mining and manufacturing.

On a monthly basis, economic activity in July grew 0.1% in seasonally-adjusted terms, which matched June’s print. The overall trend continued to deteriorate as annual average growth in economic activity fell from 2.0% in June to 1.8% in July, marking the lowest result since April 2010.

Alejandro Fernández Beros, Economist at Gemines, sees July’s weak reading together with other recent subdued data releases pointing to a prolonged period of slack in the economy:

“Today’s IMACEC was very bad and confirms the hypothesis that the economy is still decelerating. This, coupled with the deterioration in the labor market and weak sentiment indicators, does not allow us to entertain many illusions about the evolution of economic activity during the rest of the year and, probably, the first half of 2017.”

The Central Bank sees GDP expanding between 1.25% and 2.00% this year. For next year, the Bank forecasts an expansion of between 2.0% and 3.0%. Panelists participating in the LatinFocus Consensus Forecast see the economy growing 1.8% in 2016, which is unchanged from last month’s forecast. For 2017, the panel expects the economy to pick up the pace and expand 2.3%.

Author: Teresa Kersting, Economist

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Chile Economic Activity Chart

Chile Economic Activity July 2016 3

Note: Year-on-year changes and annual average growth rate in %.
Source: Chile Central Bank (BCC) and FocusEconomics calculations.

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