March 7, 2016 / 12:57 PM / in 2 years

UPDATE 2-Chile economy grows at slowest pace in nearly 6 years

(Recasts first paragraph; adds comments from Finance Minister, economist)

By Anthony Esposito

SANTIAGO, March 7 (Reuters) - Chile’s economy grew at its slowest pace in almost six years in January as a rout in copper prices hurt the key mining sector, though the government downplayed the data, saying it expected better numbers in February.

The IMACEC economic activity index, encompassing about 90 percent of the economy tallied in gross domestic product figures, rose 0.3 percent in January from the same month a year ago, central bank data showed on Monday.

Services activity growth was curtailed by a fall in mining and manufacturing, the central bank said.

However, the reading came in above expectations of a 0.1 percent rise. Some analysts had even forecast a contraction, against a strong comparative.

“What happened is not a surprise for us. We’re comparing ourselves to the so-called green shoots from last year, we have one less (working) day,” Finance Minister Rodrigo Valdes told journalists.

Valdes said he expects growth rates to gradually increase in coming months, adding “the February figure is going to be much higher than this one.”

January’s IMACEC reading was the weakest since Chile’s economy expanded 0.1 percent in March 2010, immediately after a devastating earthquake.

“The soft January IMACEC numbers reinforce concerns that the domestic real business cycle may be losing momentum once again,” said Goldman Sachs economist Tiago Severo.

“Less stimulative fiscal and monetary policy, subdued business and consumer confidence, and sluggish external demand are likely to continue to weigh on growth in the near term,” he added.

In comparison with December, economic activity was flat in seasonally adjusted terms.

The government forecasts 2016 economic growth in the top copper exporter of 2.75 percent, but Valdes has said that projection is likely too high. By law, the government can only update its official growth forecasts twice a year, in July and end-September. (Reporting by Anthony Esposito; Editing by W Simon and Meredith Mazzilli)

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