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UPDATE 1-Mine strike leads Chile economy to eight-year-low
April 5, 2017 / 1:07 PM / 8 months ago

UPDATE 1-Mine strike leads Chile economy to eight-year-low

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SANTIAGO, April 5 (Reuters) - Chile’s economic activity in February slid 1.3 percent from a year ago, the central bank said Wednesday, its worst performance since the 2009 financial crisis, largely due to a strike at a major copper mine.

The IMACEC economic activity index - equivalent to some 90 percent of the economy - came in broadly in line with a Reuters forecast for a slide of 1.2 percent.

The reading was dragged down by an around 17-percent fall in mining activity. Escondida, the BHP Billiton operated copper mine in northern Chile that is by far the world’s biggest, was halted the entire month due to a strike.

Workers returned to their posts from March 25, but the company has warned that it will take some time for operations to get back to full capacity.

Chile’s finance minister Rodrigo Valdes said Wednesday that, while he did not expect “amazing” growth in March from the likely continued impact of the strike, the effect was transitory and a gradual recovery should happen over coming months.

February’s reading was also affected by calendar factors and devastating wildfires that hurt the country’s important forestry industry.

Although one-off events, they have hit the world’s top copper exporter at a time when economic growth and investment were already struggling.

The central bank has cut the benchmark interest rate twice this year as it seeks to stimulate the economy, and has indicated more easing may be on the cards.

“With this reading and with what is expected in March, it’s almost a certainty that the central bank should deliver more monetary stimulus in the second quarter,” said Scotiabank economist Benjamin Sierra.

In comparison with January, economic activity decreased a seasonally adjusted 0.7 pct. (Reporting by Rosalba O‘Brien and Antonio de la Jara Editing by W Simon and Nick Zieminski)

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