PREVIEW-Chile’s Q2 GDP seen growing 4.2 pct from Q1

WHAT: Chile GDP data for second quarter 2010

WHEN: Wednesday, Aug. 18, 8:30 a.m. local time (1230 GMT)

By Molly Rosbach

REUTERS FORECAST: Chile’s economy is seen growing by 4.2
percent in the second quarter of 2010 from the first quarter,
according to a Reuters poll of eight analysts. That would be
the fastest pace of seasonally adjusted quarterly growth in at
least 15 years.

Estimates ranged from a seasonally adjusted expansion of
3.5 percent to 5.0 percent.

A wider pool of 13 analysts see GDP growing by a median 6.2
percent in the second quarter, compared with the same period a
year ago. That would be the biggest year-on-year quarterly
expansion since the second quarter of 2005, central bank data
shows.

The economy grew by just 1 percent in the first quarter of
2010, given the massive Feb. 27 earthquake that hammered
industries in south-central Chile. In the second quarter of
2009, GDP contracted by 4.5 percent amid the global financial
crisis.

FACTORS TO WATCH: Analysts are keeping an eye on strong
domestic demand and dynamic retail sales, which have helped
Chile’s economy recover quickly from both the global crisis and
the devastating earthquake, for clues on the pace of expected
further central bank interest rate hikes.

Strong growth in the retail and service sectors during the
quarter have offset a slower-than-expected recovery by the
construction and industrial sectors.

MARKET IMPACT: Analysts don’t see the GDP data having much
effect on the local bourse, as the market has already
internalized the numbers. The market has also internalized
recent figures that initially came as a surprise, such as the
better-than-expected IMACEC growth data for June released
earlier this month. For more, see [ID:nN05273094]

The economy’s dynamic recovery has the market betting on
the central bank raising its benchmark interest rate by 50
basis points in its September and October monetary policy
meetings. Analysts said the bank may pull back to 25-point
hikes for the rest of the year, ending 2010 with the key rate
near 3.5 percent.
(Reporting by Molly Rosbach and Maria Jose Latorre; Editing by
Brad Haynes and Simon Gardner)

PREVIEW-Chile’s Q2 GDP seen growing 4.2 pct from Q1