MercoPress. South Atlantic News Agency

Chilean economy slowing but still vigorous with growth ranging of 4% to 4.5%

“Consumer spending continues to show an elevated dynamism” according to banker Vergara

Chile's central bank cut its forecast range for 2013 GDP growth but maintained inflation and domestic demand predictions as the effects of a slowdown hitting copper demand are moderated by consumer spending.

The bank anticipates the economy of Chile will expand between 4 and 4.5% this year, compared to a prior projection of between 4 and 5%, according to the bank's quarterly Monetary Policy Report published Wednesday.

The bank also estimated growth in 2014 of between 4 and 5% and maintained its 2013 domestic demand forecast at 4.9%.

“The healthy slowdown in activity that we were expecting is materializing. However, consumer spending continues to show an elevated dynamism, encouraged by labour market conditions,” Central Bank President Rodrigo Vergara said in presenting the report to the Senate.

In July the IMF estimated growth in Chile would slow to 4.6% from last year's 5.6% as copper prices fell and investment cooled. But surprisingly unemployment in May to July hit its lowest since records using the current methodology began in 2010.

The bank forecast on Wednesday that inflation in 2013 would be 2.6%, rising to 2.8% in 2014, just under the midpoint of the bank's annual inflation target range of 2 to 4%.

The bank said it sees the price for copper, which makes up 65% of Chile's export revenue, dropping from an average 3.30 dollars per pound this year to 3.05 in 2014.