Chile says economy to take far bigger downturn than originally predicted

SANTIAGO, June 22 (Reuters) - Chile’s Budget Office said on Monday the country´s economy would shrink 6.5% in 2020, a far deeper hole than predicted just two months prior as the coronavirus pandemic continues to pummel the world´s top copper producer.

Budget officials estimated in April that GDP would contract by 2%. At the time, Chile’s president, Sebastian Pinera, had talked of a “gradual reopening” of the country´s economy.

Since then, the virus has exploded in Chile, prompting health officials to lock down the capital Santiago, the country’s economic engine, and force nearly 10 million of its citizens into lockdown.

The budget office said in its second-quarter public finance report on Monday it saw inflation at 2.8%, down from its April prediction of 3.3%. Domestic demand, meanwhile, is expected to tumble 9.8%, versus an estimated drop of 3.3% previously.

The report put the 2020 copper price, a critical driver of Chile’s economy, at $2.48 per pound, up from a previous estimate of $2.36 per pound in April.

Chile´s central bank also warned last week that the South American nation´s economy would contract between 5.5% and 7.5% in 2020, taking it to the lowest levels since the Latin American debt crisis of the 1980s.

Chile has confirmed nearly 247,000 cases of coronavirus and 4,502 deaths due to COVID-19.

Reporting by Dave Sherwood and Natalia Ramos in Santiago Editing by Matthew Lewis