Chile: Growth cooled down further on a sequential basis in early Q4

Florencia Vazquez,Gustavo Arruda,Marcelo Carvalho,Nader Nazmi - Market Economics
Daily Latam Spotlight | 06 Dec 2012 06:00 |

Chile: Growth cooled down further on a sequential basis in early Q4.

CHILE

Growth cooled down further on a sequential basis in early Q4. The monthly proxy for real GDP, Imacec, was reported to have advanced a robust 6.7% y/y in October. This reading stood slightly ahead of our forecast and the median estimate from the Bloomberg survey (both: 6.2% y/y). On a three-month moving average basis, growth accelerated slightly to an above-potential 6.0% y/y.

But beyond the robust performance in y/y terms, economic activity was reported to have contracted 0.5% m/m (sa) in October. We had forecast a modest expansion. The September reading was also revised lower to 0.7% m/m (sa) from a previously reported 1.0% monthly gain.

As a result, real GDP growth appears to have slowed further in early Q4. On a 3m/3m (saar) basis, economic activity expanded at a 2.6% pace in October. This below-potential reading compares to 4.1% and 7.1% q/q (saar) advances in Q3 and Q2 2012, respectively.

The moderation in sequential growth stands in line with our expectations (we actually look for some additional slowing this quarter) and will probably ease the near-term central bank concerns about a steadily strong, domestic economic performance (highlighted recently). The December monetary policy report (to be unveiled on 18 December) will be reviewed for official views on recent growth performance. We forecast below-potential real GDP readings before economic activity reaccelerates more decisively in H2 2013.

Below the headline, the monetary authority highlighted that manufacturing activity and commerce were the main drivers of real GDP growth in October. Recall that manufacturing production had advanced a whopping 9.1% y/y in October.