Chile economic activity down 3.3 percent in November

Chile‘s economic activity dropped 3.3 percent in November, led by a slump in mining activity, the central bank has said, and officials predicted low growth for the coming year as the country reels from anti-government unrest. The prediction is based on the South American country’s economic activity index or IMACEC (Indicador Mensual de Actividad Economica).

Protests have rocked Chile, the world’s top copper producer, for two months, leaving 26 dead and causing billions of dollars in losses for private businesses and public infrastructure. Demonstrations, sometimes violent riots and looting prompted the central bank in December to slash forecasts for growth, investment, and demand through 2020.

The IMACEC economic activity index, which was reported on Thursday, encompasses about 90 percent of the economy that gross domestic product (GDP) covers.

“The October and November IMACECs are among the worst since the sub-prime crisis,” Minister of Finance Ignacio Briones said. He added the bad news was largely expected, but bode poorly for the coming months. “In 2020, we expect to have a year of low growth.”

Mining activity measured in GDP terms plunged 5.1 percent in November, the bank said, dragging overall growth downwards and marking an early sign that the protests may have had a knock-on effect on the main economic driver.

Chile’s vast copper mines – the country produces nearly a third of the world’s copper – had largely maintained production and operated normally through early November at the height of the unrest, though some mining companies had warned that protests, strikes, and road blockades were taking a toll.

Non-mining activity also fell 3.1 percent, the central bank said, led by a fall in both commerce and services. The bank highlighted sharp declines in transportation and tourism.

Much of the capital Santiago, with a population of six million, was shut for a period near the end of October as riots and looting closed streets, central squares, and many small businesses, hotels, and restaurants.
Despite dire predictions, unemployment through November fell slightly, the government said earlier this week.

Analysts and economists have since said that an increase in job losses would likely be felt in subsequent months, as unemployment lags behind falling economic growth.

Chile’s finance minister said in mid-November that as many as 300,000 jobs could be lost as a result of the protests.

On Thursday, he told reporters he hesitated to make further predictions but said he was “worried” about the effect of slumping economic growth on unemployment.

“It’s not yet been reflected in the data … and hopefully, it won’t be,” he said. “But, we have to pay extremely close attention.”