Quantcast
Get breaking news alerts via email

Click here to manage your alerts
Chile cuts growth forecast for second time this year
First Published Jul 14 2014 10:19 am • Last Updated Jul 14 2014 10:19 am

Santiago — Chile cut its 2014 economic growth forecast for the second time this year, citing a steep slowdown in domestic demand.

The economy of the world´s biggest copper producer will expand 3.2 percent in 2014, down from a previous estimate of 3.4 percent, Budget Director Sergio Granados said in a speech to Congress Monday. Domestic demand will expand 1.8 percent, down from the 5.4 percent forecast in this year’s budget.

Join the Discussion
Post a Comment

The government cut its forecast after manufacturing stalled, retail sales growth eased and investment tumbled in the first part of the year. The slowdown has been worse than the government and central bank expected, with policymakers cutting their own forecasts three times and reducing the benchmark interest rate rates four times in the past year.

"The cut is very reasonable given that growth expectations are falling," Ruben Catalan, an economist at Banco de Credito e Inversiones in Santiago, said by phone. "We have entered a downward cycle and we are seeing factors that could delay a recovery, with employment likely to rise in coming months."

Fixed capital formation fell 5 percent in the first quarter from the year earlier, after tumbling 12.3 percent in the previous three months, as an investment boom in the mining industry came to an end.

Policymakers said in their last quarterly monetary policy report that gross domestic product will expand 2.5 percent to 3.5 percent this year.

The economy expanded 2.6 percent in the first quarter from a year earlier, the slowest pace since 2010 and compared with 2.7 percent in the previous three months and 5 percent in the third quarter.

Economists expect GDP to grow 2.9 percent in 2014, according to a monthly survey released by the central bank last week. They forecast policymakers will cut the key rate by a quarter point to 3.75 percent Tuesday and to 3.5 percent in the next five months.

The central bank has cut the benchmark interest rate four times since October as growth slows. In their last meeting in June 12, policy makers were split in their decision to leave rates unchanged for the first time since April 2008. The newest director, Pablo Garcia, voted for a quarter-point reduction, citing the need for further economic stimulus.


story continues below
story continues below



Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.