PREVIEW-Chile economy seen down 0.4 in Sept vs Aug

WHAT: Chile September economic activity data (CLACTI=ECI: )

WHEN: Friday, Nov. 5 at 8:30 local (1130 GMT)

REUTERS FORECAST: Chile’s economy is seen contracting a
seasonally-adjusted 0.4 percent in September compared to
August, according to a Reuters survey of seven analysts whose
estimates ranged from flat to a contraction of 0.9 percent.

A wider pool of 11 analysts forecast the monthly IMACEC
indicator of economic activity to jump 6.2 percent compared to
September of last year, with estimates ranging from 5.0 percent
to 7.0 percent growth.

FACTORS TO WATCH: Analysts see the booming Chilean economy
taking a breather in September after several months of surging
growth on the strength of internal demand as the country
recovers from a massive February earthquake.

Industrial output (CLIP=ECI: ) rose a worse-than-expected 3.0
percent in September from a year earlier, down from a 6.9
percent year-on-year jump in August — the largest such
increase in six years. For details see [ID:nN28119280]

Analysts expect retail sales to begin slowing from the
booming pace of recent months, eventually reducing the dynamism
of Chile’s economy, which is on track to grow more than 5
percent this year.

MARKET IMPACT: As Chile’s surging economic recovery
subsides, the central bank will have more room to maintain the
slower pace of interest rate increases set last month.

Chile’s central bank raised its benchmark rate (CLINTR=ECI: )
by 25 basis points to 2.75 percent in October, after four
consecutive 50-basis point increases from a record-low 0.50
percent rate in June. [ID:nN14173354]

Interest rate futures show the market is expecting the
central bank to raise its benchmark interest rate by 25 basis
points this month and next to reach 3.25 percent by the end of
the year.

Slower rate hikes will mean less upward pressure on Chile’s
peso (CLP=CL: ) (CLP=: ), which has risen more than 12 percent
since the end of June, as investors chase higher interest rates
in emerging economies amid the sluggish global rebound.
(Reporting by Ines Guzman and Brad Haynes; Editing by Padraic

PREVIEW-Chile economy seen down 0.4 in Sept vs Aug