Brazil & Southern Cone - May 2012 (ISSN 1741-4431)

Chile’s economic performance continues to surprise on the upside. According to the central bank, economic activity rose a higher than expected 5.2% year-on-year in March, sparking concerns of overheating. Finance Minister Felipe Larraín rejected this notion in a 7 May press conference and pointed out that Chile should take credit for its posting continued positive growth despite the “complex” international scenario. Larraín said that key important sectors like construction and retail remained dynamic, but admitted to a slight activity falls in manufacturing and mining.

Copper exports, Chile’s main revenue source, were valued at US$3.58bn in April, up 57.3% year-on-year over the US$2.27 registered in April 2011. First quarter copper sales came to US$14.bn, up 34.2% year-on-year.

Larraín said he expected a first quarter real annual GDP result of 5.6%. The central bank will release its figures on 18 May.

In the bank’s April poll of local economists, the consensus real GDP growth forecast for 2012 was 4.8% up from 4.6% previously, the fourth consecutive monthly increase. Significantly, inflation expectations for the year remained stable 3.3%, lower than the central bank’s forecast 3.5% and well within the official target range of 2%-4%. In 2011, inflation was 4.4% on the back of the higher than expected real GDP growth of 6.0%. That forced the central bank to revise up its inflation forecast for 2012.