Top Copper Maker Chile Trims Growth Forecast as Demand Slows
The government reduced its gross domestic product forecast to 4.7 percent from 5 percent in October, according to a statement distributed today by the office of Budget Director Rosanna Costa. The price of copper, which accounts for more than half of Chile’s exports, will average $3.55 a pound in 2012, compared with the previous estimate of $3.70 a pound.
Finance Minister Felipe Larrain on Oct. 4 presented the government’s 2012 forecast to Congress, warning that the mounting crisis in Europe could stymie growth in the world’s top copper producer. Since then, the central bank has reported GDP growth slowed to 5.6 percent in the first quarter of 2012 from 6 percent for all of last year.
The peso, which gained 0.8 percent today to 494.44 per U.S. dollar, will average 500 this year, according to Costa. The government in October estimated the peso would average 472.
As a decline in copper and other commodities caused exports to slide 2.3 percent in the first half of the year, lower fuel and food prices have pushed down inflation rates.
The government forecasts inflation will end 2012 at 2.7 percent compared with the 2.9 percent forecast from October. Inflation eased from 4.4 percent at the end of last year to 2.7 percent in June, the lowest rate since February 2011. Policy makers target 3 percent inflation, plus or minus 1 percentage point over 24 months.
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