Preliminary GDP figures indicate that the economy stagnated in Q1 2019 in q/q terms, after growing +1.3% q/q in Q4 2018. In y/y terms, GDP grew +1.6%, slowing down from +3.6% in Q4. On the production side, this marked deceleration was due to temporary weather disruptions as well as mining maintenance shutdowns hurting growth in the mining sector (-3.6% y/y). On the demand side, private consumption was the main driver of growth helped by low inflation and a still accommodative monetary policy. External demand was a drag, as export growth fell with mining production (-1.8% y/y) and imports followed domestic demand (+2.3% y/y). Stable copper prices, an unchanged monetary policy (after one rate hike in January) and pro-business reforms are good news for growth which will slow but still be around +3% in the next two years. The main risk to the outlook is the escalation of the U.S.-China trade feud and its impact on Chinese activity, as China is Chile’s major export and import partner.
