Chile's economic activity down 10.7% in July, better than expectations

SANTIAGO (Reuters) - Chile's economic activity CLACTI=ECI was down 10.7% in July from the same month a year ago, the central bank said on Tuesday, an improvement on the 12.5% drop expected by the market as the Latin American country remained under strict lockdown to slow the spread of the coronavirus.

The bank’s IMACEC economic activity index encompasses about 90% of the economy tallied in gross domestic product figures.

Economic activity rose 1.7% compared with the previous month, while the world’s top copper producer managed to keep its industrial engine on the road, with mining activity increasing by 1.4% from the same period the previous year.

Non-mining economic activity fell by 12%. The most affected sectors were construction and services, namely transport, restaurants and hotels, and, to a lesser extent, trade and the manufacturing industry.

Finance Minister Ignacio Briones said the fall was less than expected and he was hoping for brighter news ahead. “And by the end of the year, positive figures and recovery in 2021,” he tweeted.

During July, half of the country remained in strict lockdown while case numbers regularly reached between 2,500 and 3,000 and deaths often exceeded 100 daily.

This week, with cases now largely below 2,000 a day, the government said it will continue to ease lockdowns.

In an analyst note, think tank Teneo intelligence said it was anticipating an upwards correction to the 2020 GDP growth projection in the Central Bank’s quarterly monetary policy report (IPoM) published on Wednesday.

In June, the bank forecast a range of -5.5% to -7.5% but Teneo said it could now alter its new worst case to -6%, due to a combination of government fiscal stimulus packages, citizens spending the 10% of their private pensions they were allowed to draw down, the relaxation of lockdowns and a recovery in the copper price thanks to improved demand from China.

Reporting by Aislinn Laing; Editing by Jonathan Oatis and Alistair Bell