* Q2 GDP +1.9 pct y/y, +0.2 q/q
* Q1 GDP revised down to +2.4 pct
* Central bank says economy weak across all sectors (Recasts, adds bullets, details, market reaction)
By Rosalba O'Brien
SANTIAGO, Aug 18 Chile's gross domestic product grew at its weakest pace since 2009 in the second quarter as investment waned and a previously rapid expansion in consumer spending slowed, central bank data showed on Monday.
The economy of the world's top exporter of copper grew 1.9 percent in the second quarter compared with a year ago, or a seasonally adjusted 0.2 percent compared with the first quarter.
That implied annual growth of 2.2 percent for the first half, after the first-quarter reading was revised down to 2.4 percent from the bank's previous 2.6 percent estimate.
The annualized second-quarter figure was the worst performance for the economy since it contracted in the third quarter of 2009 at the height of the credit crunch.
It was not, however, a surprise. Chile's economy has been cooling rapidly as a downturn in mining investment has spread to other sectors. Domestic demand in the second quarter fell 0.9 percent compared with the first three months of 2014, the bank said.
The reading "was a reflection of the weak performance of the majority of economic sectors" said the bank, highlighting manufacturing, agriculture and retail as the biggest drags on growth.
It was unlikely that the economy would show significant signs of stabilizing before the end of the year, said BCI Estudios economist Antonio Moncado.
A key risk now is a possible deterioration in the labor market and rise in unemployment, which so far has stayed relatively low, he said.
"Such a scenario could go on impacting on the dynamism of domestic demand, prolonging the low activity readings for the rest of the year, and making necessary another downgrade to growth estimates for this year," said Moncado.
In June, the central bank estimated that growth in 2014 would be between 2.5 percent and 3.5 percent.
The bank has reacted to the slowdown by entering an easing cycle, cutting the benchmark interest rate 150 basis points since October.
There is little sign that the policy is yet having an effect, although central bank head Rodrigo Vergara told Reuters last month that the impact would start to be felt in the second half of 2014 and more strongly in 2015.
One bright spot was the current account, which showed a slim surplus of $28 million in the quarter. The Chilean peso has weakened around 9 percent since the start of the year versus the U.S. dollar, a major contributor to an around 9 percent drop in imports in the quarter compared with a year ago.
The peso was trading mostly flat on Monday, with traders focusing more on the central bank's monetary policy meeting on Thursday. After the market close, the bank cut interest rates by 25 basis points and indicated further easing bias. (Editing by W Simon, Chris Reese and Dan Grebler)