UPDATE 2-Chile’s IMACEC index rises 1.3 pct in July vs June

* IMACEC tops forecast, govt says recovery solidified

* Inflation still seen under control in August

* Cenbank likely to continue aggressive rate hike cycle
(Adds data details, May data review and peso value)

By Brad Haynes

SANTIAGO, Sept 6 (BestGrowthStock) – Chile’s economy expanded 1.3
percent in July versus June, the central bank said on Monday,
above forecasts of a 0.65 percent expansion, confirming steady
economic recovery in the world’s top copper producer.

Despite steep economic growth, the central bank is expected
to raise its benchmark rate by another 50 basis points to 2.50
percent at its Sept. 16 meeting as inflation remains tame.

On a year-on-year basis (CLACTI=ECI: ), the IMACEC indicator
of activity showed the economy rose 7.1 percent against July
2009, the highest in 14 years. That compared with forecasts of
6.5 percent expansion in a Reuters poll. For details, see
[ID:nN02219648]

Finance Minister Felipe Larrain said the
stronger-than-expected data for July shows that the country’s
economic recovery has solidified in the wake of the global
financial crisis and a massive earthquake that ravages cities
in February.

He also reiterated comments by President Sebastian Pinera,
who has said the economy will likely grow more than 5 percent
in 2010.

Dynamism in retail, transportation, communications and
energy helped boost the economy in July, the central bank said.
Retailers like Cencosud (CEN.SN: ) have especially benefited from
the post-quake reconstruction efforts that has boosted
consumption. Cencosud shares have skyrocketed this year.

The bank also revised upward its year-on-year IMACEC data
for May to 7.4 percent from 7.1 percent.

“We see activity data that is surprising us in the upside,
but that is not translating into surprises in inflation,” said
Maria Jesus Bofill, an analyst with BCI Corredor de Bolsa.

The market expects inflation to rise to 0.2 percent in
August, according to a Reuters poll of analysts. For details
see, [ID:nN02219648]

The peso traded slightly firmer on Monday at 495.80/496.30
per dollar, easing some initial gains after the IMACEC data was
released. Still, analysts said the stronger economy could
continue to boost the currency, considered one of the top
performers in Latin America.

The currency has appreciated by more than 8 percent since
July on the back of high copper prices and positive global
stocks, which has triggered intervention warnings by the
central bank.

However, experts see the bank only stepping in if the peso
trades between a range of 480 and 465 per dollar.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a TAKE A LOOK on Chile economy see [ID:nN30113748] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Brad Haynes; editing by Jeffrey Benkoe)

UPDATE 2-Chile’s IMACEC index rises 1.3 pct in July vs June