(Bloomberg) -- Chile’s economic activity increased for the third straight month in December as factors including lower interest rates and strong copper production help to steady growth following a stretch of volatility.
Most Read from Bloomberg
-
New York’s First ‘Passive House’ School Is a Model of Downtown Density
-
Historic London Elevator Faces Last Stop in Labour’s Housing Push
The Imacec index, a proxy for gross domestic product, rose 0.9% from November, above the 0.7% median estimate from analysts in a Bloomberg survey. Activity jumped 6.6% from a year prior, more than all forecasts and the biggest gain since January 2022, the central bank reported on Monday.
Chile’s economy stabilized at the end of a choppy year, as the central bank’s latest projections show gross domestic product likely expanded 2.3%. Lower borrowing costs and real wage gains bolstered demand, while output of copper — the country’s top export — also firmed. Still, there are headwinds including weak job creation and global trade uncertainty as Donald Trump unleashes tariffs.
Mining surged 4.7% on the month in December, representing the top growth driver, according to the central bank. Commerce jumped 2.7% on gains in automobile sales and wholesale. Services were unchanged in the period.
“Overall, this marks a solid end to the quarter, with total output rising 0.4% quarter-on-quarter in Q4,” Andres Abadia, chief Latin America economist at Pantheon Macroeconomics, wrote in a note. The activity report “supports our expectation of a stable interest rate in the near term. Assuming no major revisions, real GDP grew approximately 2.8% in 2024.”
Policymakers led by Rosanna Costa kept the benchmark interest rate steady at 5% last week, representing the first hold since July. While borrowing costs are down from a high of 11.25% in mid-2023, board members signaled they could stay unchanged going forward due to near-term inflation woes.
Annual inflation ended 2024 at 4.5%, well above the 3% target, and Costa has said consumer price rises will remain near 5% early this year. Cost-of-living increases are being pressured by a weak currency and electricity tariff hikes.
More broadly, Chile’s Congress removed a source of uncertainty last week, when it gave its final approval to a long-sought pension reform. The legislation, which will raise payments for both current and future retirees, also helped to push the stock market to a record high.