Chile’s economy posted an annual decline in the second quarter, according to official data published on Tuesday, missing expectations as lower copper production hit its key mining sector.
The Andean nation’s economy contracted 0.2% in the period from a year earlier, central bank data showed.
Despite improving slightly from a revised 0.3% year-on-year contraction in the first quarter, gross domestic product missed economists’ forecasts of 0.1% growth.
According to the central bank, the economic activity of the world’s largest copper producer was hampered by the key mining sector that decreased 6.4% due to lower production of the red metal.
“Copper mining operations were affected by lower ore grades and maintenance work that reduced production at the country’s major deposits,” the central bank detailed in a report.
“The surprisingly poor Q2 GDP outturn in Chile, coming alongside the recent fall in inflation, will reduce any pressure on the central bank to tighten monetary policy,” Capital Economics analyst Kimberley Sperrfechter said in a note.
Chile’s central bank is expected to keep its benchmark interest rate unchanged at 4.5% at its next meeting in September and hold that level for the next 24 months, juggling inflation moderation and economic instability.
The Andean country’s economy stood flat in the second quarter from the previous three-month period, missing expectations of 0.3% growth forecast in a Reuters poll. Despite the lack of expansion, the quarter performed better than the previous one, which contracted 0.3%.
(Reporting by Aida Pelaez-Fernandez and Carlos Serrano; Editing by Chizu Nomiyama and Alison Williams)
