Itaú BBA - CHILE - Growth surprise in January

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CHILE - Growth surprise in January

March 6, 2017

Both mining and non-mining activity expanded in the month

The monthly GDP proxy (IMACEC) for January came in above market expectations, but remains weak. Imacec grew 1.7% year over year, compared to the 1.0% expected by the market and Itaú. According to the press release announcing the data, both mining and non-mining activity expanded in the month. The January data uses a new national accounts framework and is not comparable with recent history. The central bank will publish the 2013-rebased national accounts on March 20, with revisions to activity data for the 2014 - 2016 period.

Annual growth in January was aided by one additional working day. The 1.8% year-over-year expansion in non-mining activity (+1.6 percentage point contribution) led the 1.7% headline growth, lifted by commerce and services. Mining activity grew 0.9% year-over-year, adding 0.1 percentage points to the expansion in activity. Corrected for calendar and seasonal factors, activity expanded 1.5% from last year.

At the margin, activity was lifted by mining activity. From December, the seasonally adjusted index expanded 0.4%, led by the 3.0% monthly gain in mining (0.26 percentage point contribution to the monthly growth). This comes in contrast with sectoral activity data released last week, which pointed at a weak mining performance in January. Meanwhile, non-mining activity grew by 0.2% (+0.16 pp contribution).

We expect GDP growth of 1.5% for 2016, with a recovery to 2.0% this year. Higher copper prices, low inflation and interest rates cuts would outweigh weak job creation and less fiscal support this year. The new national accounts, in which mining (a drag to activity) weighs less, is an upside risk to our forecast. On the other hand, we note that activity in February (and likely March, too) would be weak as a labor strike at the largest copper mine persists. Additionally, uncertainty over the outcome of presidential elections could be a blow to confidence.


Miguel Ricaurte

Vittorio Peretti


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