Chilean Retail Pushes Economy to Fastest Growth in 11 Months

Chile’s economy grew at the fastest pace in almost a year in November on gains in the service, mining and retail industries, increasing the likelihood that policy makers will act to cool internal demand.

The economy expanded 1.3 percent from the previous month on a seasonally-adjusted basis, the fastest gain in 11 months, the central bank said in a report posted on its website today. The Imacec index, a proxy for gross domestic product, climbed 5.5 percent from the previous year, exceeding the 5.2 percent forecast by analysts surveyed by Bloomberg.

Economic growth in the world’s top copper producer exceeded forecasts made by economist eight times in the past year as booming retail sales offset weaker demand for exports. The expansion will keep policy makers on alert for any pressures on consumer prices, Felipe Jaque, an economist at Banco Bilbao Vizcaya Argentaria in Santiago, said by phone today.

“Data continues to be a bit better than expected, meaning the anticipated slowdown is arriving at a much slower pace,” Jaque said. “The central bank will have to pay a lot more attention to inflationary pressures than it did three or four months ago.”

The inflation rate fell to 2.1 percent in November from 2.9 percent the previous month.

Two Speeds

Policy makers, who target 3 percent inflation, have kept their benchmark interest rate unchanged at 5 percent for 11 straight months. One-year rate swaps, which reflect traders’ views of average borrowing costs, grew four basis points, or 0.04 percentage point, to 5.27 percent on Jan. 4 from the end of last month.

Chile’s economy is expanding at two speeds, with retail sales growth averaging 8.5 percent over the past year, while industrial production gains 2.5 percent. That trend was even more marked in November, with retail sales surging 10.7 percent from the previous year, while manufacturing expanded 0.8 percent, according to government data published Dec. 28.

As demand expands and pulls in imports, the current account deficit will widen to 4.6 percent of gross domestic product this year from an estimated 3.8 percent in 2012, policy makers said in forecasts published Dec. 18. Chile’s trade surplus shrank to $4.2 billion in all of 2012 from $10.8 billion in 2011, according to a separate report published today by the central bank.

Internal demand will expand 5.7 percent in 2013 after climbing 6.6 percent in 2012 and 9.4 percent in 2011, according to central bank forecasts.

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