Nov. 24 (Bloomberg) -- Chile’s economy expanded at the fastest rate in more than a year in the third quarter on domestic demand and energy output, beating economists’ forecasts.

Gross domestic product grew 4.8 percent in the quarter from a year earlier from a revised 4.5 percent in the previous three months, the central bank said today on its Web site. The median estimate of 16 economists surveyed by Bloomberg was for GDP growth of 4.7 percent.

“These figures surprised the market and showed that the Chilean economy is surprisingly resistant to a rapid deceleration,” said Juan Pablo Castro, an economist at Banco Santander SA in Santiago. “Consumption is still growing at around 6 percent even though you’d expect to see the effects of inflation and interest-rate rises.”

Growth probably will slow to between 2 percent and 3 percent in 2009 from an estimated 4 percent to 4.5 percent this year as a global economic slowdown curbs demand for Chilean exports such as copper and table grapes, and internal demand growth slows to 0.6 percent from 9.2 percent this year, the central bank said on Nov. 14.

The state-run Chilean copper commission today cut its copper-price forecast for next year by half to $1.60 per pound from $3.40 a pound. The central bank expects copper, Chile’s biggest export, to average $1.65 per pound next year, it said on Nov. 14.

Currency Gains

The peso appreciated 1.5 percent today to 672.92 per U.S. dollar as of 11:04 a.m. in New York, as prices for copper surged more than 7 percent. The peso slumped to a five-year low of 682.8 peso per dollar on Nov. 21.

President Michelle Bachelet’s government “has said since 2006 that the high price of copper wouldn’t last for ever and that fact has always been included in our estimates,” Finance Minister Andres Velasco told reporters in Santiago today. “The real copper price used in 2009 will have an affect on the real budget surplus, but not on our ability to invest.”

Bachelet on Nov. 4 announced a $1.15 billion fiscal stimulus plan, adding to $850 million previously announced, drawing on savings built after copper prices more than quadrupled to a record $4.07 per pound in July. The government uses estimates of the average copper price over the next 10 years to plan spending. It aims for a so-called structural budget surplus, or surplus using that long-term copper price, equal to 0.5 percent of GDP.

Chile’s economy has accelerated since the first quarter, when the worst drought in 50 years cut output from power generators. Output from the electricity, gas and water industries expanded in the third quarter for the first time in 1 1/2 years, growing 16 percent, and private consumption expanded 5.8 percent, the fastest pace this year.

Fiscal Stimulus

Growth in construction slowed to 12 percent from 15 percent in the second quarter. Investment in plant and machinery grew 50 percent from the same period a year earlier.

The central bank increased its benchmark rate by 1.5 percent to 8.25 in the third quarter in a bid to bring inflation down from a 14-year high.

Seasonally-adjusted GDP contracted 0.1 percent from the second quarter, the first quarter-on-quarter decline since the last three months of 2003, the central bank said.

Chile now has reserves and government assets worth almost 15 percent of its gross domestic product, according to a Morgan Stanley research note today. The central bank has accumulated $22 billion in international reserves, and the finance ministry has a further $28 billion salted away.

The country “seems to be in a league of its own,” Morgan Stanley economist Luis Arcentales wrote. “It is time for Chile to shine.”

To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net

Last Updated: November 24, 2008 11:40 EST