Chile Says Growth May Top 5% as Copper Sales Drive GDP

Chile’s economic growth probably will exceed analyst forecasts and reach about 5 percent this year, and may even surpass that pace if the U.S. recovery boosts global demand for copper, Economy Minister Pablo Longueira said.

Domestic demand is “very strong” while exports will probably grow 8 percent this year, fueled by a 10 percent jump in copper shipments from the world’s largest producer of the metal, Longueira said in an interview in Lima today.

“Our budget proposal is based on 5 percent growth and we think that despite the international recession we’ll be close to this figure and could eventually exceed it,” he said.

Chile’s Finance Minister Felipe Larrain last year forecast the Andean nation would grow 5 percent in 2012. He has since cut that estimate, saying in a speech in New York last month that exceeding 4 percent growth would be “very good” in light of the Euro-area economic crisis and China’s deceleration.

At 5 percent, Chile would match Bolivia as the second-fastest growing economies in South America behind Peru this year, according to the Washington-based International Monetary Fund. Chile will expand 4.3 percent in 2012, according to the fund.

“We’re traversing a very good moment,” Longueira said. “In a volatile scenario with much international uncertainty, we’re going to post very significant growth and job creation, with wages rising like never before in our history.”

Inflation isn’t a concern and will be about 3 percent this year as food-price growth eases, he said.

Copper Price

The minister’s forecast are more optimistic than those made by the central bank, which estimates exports of goods and services will increase 3.8 percent in 2012, while the economy expands between 4 percent and 5 percent. It also expects inflation to end the year at 3.5 percent -- matching levels reported in April.

And while Chile’s state-run copper commission Cochilco forecasts the country’s copper supply will increase 9.6 percent in 2012, average copper prices have declined 6 percent so far this year from all of 2011.

Copper futures for July delivery fell 2.5 percent to $3.557 a pound at 12:38 p.m. on the Comex in New York, after earlier slipping to $3.5475, the lowest level since Jan. 10. Copper fell 2 percent last week.

Longueira, 53, received his civil industrial engineering degree from the University of Chile and is a member of the pro-government UDI party. He was a member of the lower house Finance Committee and was a senator before joining the government last year, according to his biography posted on the ministry website.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.

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