Chile’s economic activity posts surprise increase on mining

Chile’s economic activity unexpectedly grew on a jump in mining as the central bank prepares to deliver another aggressive interest rate increase later this week.

The Imacec index, a proxy for gross domestic product, rose 1.6% in March from the month prior, more than all estimates in a Bloomberg survey that had a -0.2% median forecast. From a year ago, activity increased 7.2%, the central bank reported on Monday.

The stronger-than-expected increase comes as Chile’s economy cools following last year’s record growth of 11.7%. The central bank is expected to deliver its seventh straight rate hike on Thursday as consumer price increases barrel toward double-digits. Financial markets are also jittery as the Constitutional Convention votes on crucial articles for the draft charter.

Mining activity rose 6.6% during the month, according to the central bank. Industry gained 3.5% while services increased 0.7%.

In April, Chile’s lower house of congress rejected dueling proposals for another round of early pension fund withdrawals which helped propel growth in 2021. Gross domestic product will grow 1%-2% this year and may shrink in 2023, according to central bank estimates published on March 30.

(By Matthew Malinowski)