MercoPress. South Atlantic News Agency

Chile anticipates mild slowdown after years of strong growth

Minister Larrain: only five countries in the world can tell of an economic success story as Chile

Chile's economy is entering a mild slowdown phase after years of strong growth said Finance Minister Felipe Larrain on Friday. Chile has been expanding at about 5.8% on average for the past three years despite global economic woes while maintaining enviably low inflation and jobless rates.

But the galloping growth has been reined in. The economic activity indicator expanded by 3.1% in March, marking its slowest pace in more than 20 months.

“All measurements of the consumer price index show a low inflation. At the same time the economy is slowing down,” Larrain said at a meeting with international correspondents.

Larrain said economic activity should recover in April but growth will be affected by a series of port strikes that blocked exports of copper, fruit and wood pulp in late March and April.

”I think there are five countries in the world that can tell an (economic success) story like the one Chile's lived in the past years, being able to keep growth at around 6%“ Larrain said.

”This has to do with a recovery of trust, expectations and public policies in this period.”

Chile is seen as probably the best managed Latin American economy because of its strong growth, prudent macroeconomic policies and solid institutions.

But critics say policies launched under former dictator Augusto Pinochet that privatized much of the country are still blocking urgent social reform and fostering social exclusion.

Chile has the worst inequality rate among the 34 countries of the Organization for Economic Co-operation and Development and millions have protested for a wider distribution of Chile's copper wealth, the preservation of the environment and free education.

On Thursday Chile's central bank held its key interest rate as expected at 5%, following softer economic growth and domestic demand in the first quarter as well as a weaker peso currency.

The rate has been held at 5% since a surprise cut in January 2012, as external economic threats countered by robust local economic growth, low inflation and ebullient domestic demand have kept the bank's hands tied.