Bloomberg News

Chile Manufacturing Unexpectedly Contracted 2.5% in December

January 30, 2013

Chile’s manufacturing index decreased 2.5 percent in December from the previous year on a decline in production of wood, metal and chemical products.

The median estimate of 15 analysts surveyed by Bloomberg was for manufacturing to rise 1 percent from the previous year. Retail sales grew 11 percent from the previous year, compared with the median estimate of 8.4 percent. Copper output in the world’s largest producer of the metal fell 1.8 percent over the period to 513,344 metric tons, the National Statistics Institute said in a report published today.

Private consumption and investment drove economic growth in the Andean nation last year, offsetting weaker demand for raw materials and manufactured exports. Growth of internal demand has yet to put pressure on inflation rates, giving the central bank board space to leave borrowing costs unchanged, according to Banco Bilbao Vizcaya Argentaria SA. (BBVA)

“The central bank seems increasingly comfortable on hold,” BBVA analysts including Alvaro Vivanco wrote in a Jan. 25 report e-mailed to investors. “Given the lack of domestic triggers, it would be difficult for the central bank board to embark on a hawkish path.”

Policy makers have kept borrowing costs at 5 percent for 12 straight monthly meetings. The key rate will rise to 5.25 percent by February 2014 after remaining unchanged for at least the next six months, according to traders and investors surveyed by the central bank on Jan. 22. Inflation in December eased to 1.5 percent, the slowest in 2 1/2 years.

Gross domestic product climbed 5.7 percent in the third quarter from the previous year as investment leaped 13 percent and private consumption gained 6.4 percent, according to central bank data. GDP expanded 5.7 percent in the second quarter and 5.2 percent in the first, and grew an estimated 5.45 percent for all of 2012, according to analysts polled by Bloomberg.

The peso rose 0.17 percent to 471.10 per U.S. dollar at 9:06 a.m. local time today.

To contact the reporter on this story: Randall Woods in Santiago at

To contact the editor responsible for this story: Andre Soliani at

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