Copper industry drags Chilean economy out of four-year slumber

Chile’s industrial production expanded at the second fastest pace in almost three years in October as the mining industry drags the economy out of its slowest period of growth since the early 1980’s.Industrial production rose 5% from a year earlier, the National Statistics Institute said on its website yesterday, compared with the 5.6% median forecast of nine analysts surveyed by Bloomberg. Manufacturing gained a weaker-than-expected 0.6% over the same period, while mining output leaped 10.5%.Copper production has soared in the past four months as miners rush to cash in on higher prices and begin to increase investment. Chile is the world’s largest producer of the red metal, which accounts for just over half of exports. The economy is also receiving a boost from monetary policy, after the central bank cut its key interest rate four times at the start of the year. With growth accelerating, few now expect further rate reductions.“This week’s data confirms that the recovery path continues, led by a reactivation in the mining sector and the resilience of consumption,” said Andres Abadia, senior economist at Pantheon Macroeconomics. “Inflation is under control and low interest rates will help this trend to continue in the next three to six months.”Policy makers left the key rate unchanged at 2.5% in November citing the prospects of faster growth next year. Pantheon Macroeconomics forecasts the economy will expand 1.7% this year and about 3% in 2018.