UPDATE 3-Chile's economy rebounds, finance minister says

(Adds byline, analyst comment, quotes)

By Rodrigo Martinez

SANTIAGO, April 20 (Reuters) - Chile's economy has shown
early signs of rebounding and likely grew more than 5 percent
in the first quarter of this year compared with a year earlier,
Chilean Finance Minister Andres Velasco said on Friday.

"All indications are that the first quarter of this year
will be a solid quarter, with growth rates comfortably above 5
percent," he told a meeting of Chilean and Mexican businesses.

Velasco said that in January and February, according to
Chile's economic growth indicator (IMACEC), Chile grew on
average 5.5 percent, mid-way in the range of growth as
projected by the central bank for 2007 of between 5 and 6
percent.

"The short-term indicators speak of an economy that is
definitely rebounding," he said.

Chile's economy grew a disappointing 4.0 percent in 2006,
slowing from stellar growth of 5.7 percent in 2005 and 6.0
percent in 2004.

In the first quarter last year, the economy grew 5.0
percent.

"Tendencies show that the economy in terms of industrial
production, precisely the variable that saw slower growth in
certain quarters and months last year, has been rebounding,"
Velasco said.

"This means the IMACEC global growth indicator has
rebounded even more robustly."

In its most recent central bank poll, economists surveyed
by the bank said the economy likely grew 5.0 percent in March
compared to the same month in 2006.

STABLE RATES

Analysts said the economic rebound this year reinforces the
belief that the central bank will leave benchmark interest
rates unchanged for the time being at 5.0 percent.

"There are evident signs in the economy that show the level
of activity has recovered from levels in the second half last
year, which is good," said Alberto Ramos, senior economist for
Latin America for Goldman Sachs.

"That means it is very probable that the central bank will
hold the rate near 5.0 percent instead of boosting monetary
stimulus, as it had been expected to do in February," he said.

Velasco said that despite the strong rise in the price of
copper, Chile's chief export, the exchange rate in real terms
has not deteriorated in general.

"This is an achievement for the Chilean economy, which
comes from sound fiscal and monetary policies," he said.