UPDATE 2-Mining, commerce keep Chile economic expansion robust

Mon Oct 7, 2013 12:01pm EDT

Related Topics

SANTIAGO Oct 7 (Reuters) - Chile's economic activity grew a robust 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 slightly higher 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 activity index jumped a seasonally adjusted 0.7 percent in August against July, racing ahead from a 0.1 percent increase in July against June.

"The sectors that again boosted growth, just like last month, were mining and retail, underscoring that consumption remains highly dynamic in line with the expansion that the labor market has shown," Credicorp Capital said in a note to clients.

Chile's many shopping malls buzz with shoppers buying locally made and imported goods, credit is relatively easy to come by, and unemployment is at its lowest level since the current methodology for measuring it began in 2010.

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

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

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

But Chile's central bank has maintained a wait-and-see stance regarding monetary policy, in large part because consumer spending has remained strong, though it is showing signs of moderating.

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 on Sept. 12 to keep the benchmark interest rate steady at 5 percent, where it has been held since a cut in January 2012, minutes of that meeting showed.

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

FILED UNDER: