SANTIAGO (Reuters) – Chile’s economic activity disappointed markets and frustrated government officials in December, posting a surprising drop on a yearly basis even after the local finance minister assured that last year’s recession had been left behind.
The IMACEC economic activity index fell 1.0% in December when compared to the same period of the previous year, the central bank said on Thursday, below all estimates in a Reuters poll of economists whose median forecast was a 0.7% increase.
Economic activity in the world’s largest copper producer was also down 1.1% from the previous month.
The result contradicted projections from Finance Minister Mario Marcel, who said last week the IMACEC report for December could confirm the end of a recession as he reinforced an estimate of 2.5% economic growth for 2024.
Chile faced a sharp economic downturn in 2023 after a rapid post-pandemic recovery. The economy struggled while inflation soared, leading the central bank to hike interest rates which it has now began cutting as inflation cooled.
The year-on-year economic activity drop in December was driven by lower goods production and commerce activity, which were partially offset by an increase in service activity, the central bank said.
On a sequential basis, it added, a drop in mining activity weighed on the broader reading.
(Reporting by Fabian Andres Cambero and Gabriel Araujo; Editing by Andrew Cawthorne and Steven Grattan)
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