Chile's gross domestic product expanded at the slowest pace since 2003 in the first quarter as mining output slumped and a drought cut hydroelectricity supplies.
Chile's economy expanded 3 percent in the first quarter from the year-earlier period, slower than a 4 percent rise in the previous quarter and less than the 3.2 percent median estimate in a Bloomberg survey of 20 economists.
The worst drought in 50 years in Chile lowered hydropower reserves as shortages of natural gas curtailed output by generators, resulting in a slowdown in economic activity and industrial production. Chile's President Michelle Bachelet this week promised to solve energy problems after the central bank cut its growth forecast for the year to as low as 4 percent.
"Economic activity is facing supply restrictions in sectors like manufacturing, mining and electricity generation because of gas shortages, bad weather and strikes,'' said Alfredo Coutino at Moody's Economy.com Inc. in West Chester, Pennsylvania. "Those things should be transitory, so we could see a rebound of economic activity in the second quarter.''
Mining output declined 2.7 percent because of labor disputes and lower yields from mines. Copper output fell 8.4 percent in March from a year earlier, the National Statistics Institute said. Chile is the world's biggest copper producer.
Output from the utility industry dropped 16 percent, the central bank said. Electricity generation fell 2.2 percent in March because of the drought and gas shortages.
Recent Rainfall
Energy Minister Marcelo Tokman today said recent rainfall will help replenish reservoirs, reducing the risk of power shortages. Shares of Santiago-based hydroelectricity generator Colbun SA rose 12 percent this week as dams filled.
"If this process continues, if we have more water, that's good news for the cost of energy,'' Finance Minister Andres Velasco said today. "As we've seen, if the energy sector is running better, the whole economy runs better.''
In central and southern Chile, where Codelco, Antofagasta Plc, Anglo American Plc and Freeport-McMoRan Copper & Gold Inc. have mines, between 45 percent and 70 percent of the electricity comes from water-driven turbines.
In an annual address to lawmakers, Bachelet said Chile will develop ethanol from woodlands, consider plans for solar power plants in the desert and encourage hydroelectric development. The government will increase spending on infrastructure such as roads, ports and dams by 60 percent this year, and set up a $6 billion fund abroad to finance overseas study for postgraduate students, she said.
Public Holidays
The economy grew 5.8 percent in the first three months, taking into account public holidays, and should accelerate in the second quarter, Velasco said today. Investment rose 15 percent in the first three months of the year, and foreign direct investment reached almost 10 percent of quarterly GDP, he said.
"For all the respect I have for Velasco, he'll find the bright spot in anything,'' said Luis Arcentales, a New York- based economist at Morgan Stanley.
Chile's economy expanded 3 percent in the first quarter from the year-earlier period, slower than a 4 percent rise in the previous quarter and less than the 3.2 percent median estimate in a Bloomberg survey of 20 economists.
The worst drought in 50 years in Chile lowered hydropower reserves as shortages of natural gas curtailed output by generators, resulting in a slowdown in economic activity and industrial production. Chile's President Michelle Bachelet this week promised to solve energy problems after the central bank cut its growth forecast for the year to as low as 4 percent.
"Economic activity is facing supply restrictions in sectors like manufacturing, mining and electricity generation because of gas shortages, bad weather and strikes,'' said Alfredo Coutino at Moody's Economy.com Inc. in West Chester, Pennsylvania. "Those things should be transitory, so we could see a rebound of economic activity in the second quarter.''
Mining output declined 2.7 percent because of labor disputes and lower yields from mines. Copper output fell 8.4 percent in March from a year earlier, the National Statistics Institute said. Chile is the world's biggest copper producer.
Output from the utility industry dropped 16 percent, the central bank said. Electricity generation fell 2.2 percent in March because of the drought and gas shortages.
Recent Rainfall
Energy Minister Marcelo Tokman today said recent rainfall will help replenish reservoirs, reducing the risk of power shortages. Shares of Santiago-based hydroelectricity generator Colbun SA rose 12 percent this week as dams filled.
"If this process continues, if we have more water, that's good news for the cost of energy,'' Finance Minister Andres Velasco said today. "As we've seen, if the energy sector is running better, the whole economy runs better.''
In central and southern Chile, where Codelco, Antofagasta Plc, Anglo American Plc and Freeport-McMoRan Copper & Gold Inc. have mines, between 45 percent and 70 percent of the electricity comes from water-driven turbines.
In an annual address to lawmakers, Bachelet said Chile will develop ethanol from woodlands, consider plans for solar power plants in the desert and encourage hydroelectric development. The government will increase spending on infrastructure such as roads, ports and dams by 60 percent this year, and set up a $6 billion fund abroad to finance overseas study for postgraduate students, she said.
Public Holidays
The economy grew 5.8 percent in the first three months, taking into account public holidays, and should accelerate in the second quarter, Velasco said today. Investment rose 15 percent in the first three months of the year, and foreign direct investment reached almost 10 percent of quarterly GDP, he said.
"For all the respect I have for Velasco, he'll find the bright spot in anything,'' said Luis Arcentales, a New York- based economist at Morgan Stanley.
Posts
No comments:
Post a Comment