Economy sinks again in December dragged by mining



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The Chilean economy is still fragile. This is clear from the sector indices that revealed this Friday the National Institute of Statistics (INE).

According to the INE, lThe December fall in the index is mainly explained by the surprising 9.3% drop in mining production. This decrease is a consequence of the lower activity registered in the three types of mining that comprise it. With the December result, the Mining Production Index closed 2020 with a timid increase of 0.5%.

Manufacturing, meanwhile, advanced 0.4% in the last month of 2020, and the Trade Activity Index grew 7.4% in twelve months, accumulating an annual decrease of 2.7%. Meanwhile, retail sales rose 10.4%, lower than expected by the market.

With these figures on the table, experts confirmed what was already anticipating: activity in December would fall again after the slight rise in November of 0.3%. For the last month of the year, economists forecast that the Imacec will register a contraction of between 1.1% and 4.4%.

“Consumption lost some of its momentum, while the service sectors continue to suffer. Furthermore, mining was affected by particular events, “says Bice economist Marco Correa.

Alejandro Fernández, economist at Gemines, stresses that “the combination of a more demanding baseline together with greater restrictions on mobility combine to explain a clearly negative estimate by Imacec for December.” In fact, its forecast is -3.3%, but with a new seasonally adjusted monthly increase.

For Investments SecurityThe surprise was in mining, so they lowered their forecast for the month and now expect a decline of between -1.5% and -2.5%. “The December figures confirmed that the recovery of activity was somewhat slower than expected at the end of the year, with a GDP that would have fallen by about 1% year-on-year in the last quarter.”

Since Scotiabank they maintain that “the risks are slightly biased downwards for the month given that during December additional measures were taken to restrict mobility, which may have affected certain services on which we have limited visibility.” His estimate today is -4.1%.

For the year as a whole, expectations anticipate that The Gross Domestic Product (GDP) will contract by around 6%, being the biggest drop since the crisis of 1980.

Perspectives

The start of 2021 is not shaping up so positive either, due, in part, to the contagion scenario and which has forced a step-by-step step back in the plan.

In fact, economists expect no growth or even a drop. “We preliminarily project for the first quarter of 2021 a contraction in activity of around -2.4%,” he says Martina Ogaz, economist at EuroAmerica, while Tomás Flores, by LyD, states that “in the first quarter it is likely to be 0%, given the quarantines in tourist areas and large cities.”



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