Chilean Economy Expands at Slowest Pace Since 2010 Earthquake

Chile’s economy grew at the slowest pace in almost four years in January, expanding less than analysts expected, as the central bank indicated that further interest rate cuts were likely.

The Imacec index, a proxy for gross domestic product, grew 1.4 percent in January from the year earlier, the National Institute of Statistics said today. It was the worst result since an earthquake devastated the center-south of the country in March 2010, and compared with the 1.9 percent median estimate of 14 economists surveyed by Bloomberg. In the month, economic activity contracted 0.6 percent.

The economy is slowing more than forecast, led by investment, the central bank said in the minutes of its Feb. 18 meeting, when policy makers reduced the key rate by a quarter point to 4.25 percent. They agreed unanimously to maintain the easing bias in the statement that accompanied the rate decision, according to the minutes released today.

“For a number of quarters, economic activity, especially in sectors other than natural resources, has been growing below trend,” policy makers said. At some point, the slowdown “would be reflected in an easing of conditions in the labor market.”

Chile’s unemployment rate increased more than expected in the three months through January, rising to 6.1 percent from 5.7 percent the month before and 6 percent the year earlier, the statistics agency said on Feb. 28. Economists had expected a jobless rate of 5.8 percent, according to a survey by Bloomberg.

Manufacturing contracted 1.4 percent in January from the year earlier, while retail sales climbed 6.8 percent over the same period, the weakest pace since October 2012.

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