UPDATE 1-Chile Q1 GDP shrinks 1.5 pct vs Q4 post-quake-Cbank

* Economy shrinks in Q1 vs Q4 2009 due to quake impact

* Economy expands 1 pct in Q1 from year earlier

* Bank sees economy rebounding in second half
(Updates with central bank comment, background)

SANTIAGO, May 18 (BestGrowthStock) – Chile’s gross domestic product
shrank by 1.5 percent in the first quarter of 2010 from the
fourth quarter of 2009, when the economy grew 1.5 percent, hit
by a massive earthquake in February, the central bank said on
Tuesday.

The economy grew by 1.0 percent in the first quarter
compared with the same period in 2009, after expanding 2.1
percent in the fourth quarter from a year earlier.

Chile’s central bank reported the data after it held the
benchmark interest rate steady at 0.50 percent for a 10th
straight month on Thursday, as expected, but signaled a rate
increase could be expected. For more see [ID:nN17259614].

The bank is widely seen starting in June to raise rates
from their “minimum” level. It is lagging both Brazil and Peru,
which have fast-growing economies and have already moved to
raise rates. [ID:nN14183253]

“The first quarter (GDP) result was influenced by the
effects of the Feb. 27 earthquake on output capacity,” the
central bank said in a statement. “The sectors hardest-hit were
fishing, industry, livestock, forestry, transport and
housing.”

The bank said the current account posted a surplus of 3.3
percent of GDP in the first quarter.

The economy contracted 2.8 percent in March from a year
earlier because of the earthquake, which killed hundreds of
people, destroyed towns and hit the fruit, steel and forestry
industries in south-central Chile; the mainstay copper mining
industry, however, was mostly unscathed.

Industrial output plunged 17.4 percent in March from a year
earlier because of the quake, the biggest drop in at least 20
years, but it is seen bouncing back later in the year.
[ID:nN28181261] [ID:nN0560789]

Central Bank President Jose De Gregorio told Reuters this
month that he expects the economy to recover solidly in the
second half of the year thanks to post-earthquake
reconstruction. [ID:nN04117553]

The quake led the bank to cut its 2010 GDP growth forecast
range to 4.25 percent to 5.25 percent from a previous outlook
for a 4.5 percent to 5.5 percent expansion.
Stock Market Report

(Reporting by Antonio de la Jara, Alonso Soto, Simon Gardner;
Editing by Theodore d’Afflisio)

UPDATE 1-Chile Q1 GDP shrinks 1.5 pct vs Q4 post-quake-Cbank