Chile's annual rate of economic growth slowed sharply in May to a five-month low, on weaker energy sector activity and one less working day in the month compared with a year earlier, the central bank said on Thursday. It said its IMACEC economic activity indicator rose 4.6 percent compared with May last year, faltering from a 6.6 percent advance in April.
The May reading was the weakest IMACEC advance since January this year, when it grew 4.6 percent. It was also below a forecast for a rise of 5.4 percent in a Reuters poll of 11 analysts. The IMACEC measures more than 90 percent of the components comprising Chile's gross domestic product. GDP figures are issued quarterly.
The central bank said the year-on-year comparison was skewed by the fact there was one more working day in May 2006 than in May 2007. In May 2006, the IMACEC expanded 6.2 percent. The bank also said this May's figure was affected by "a fall in the added value of the energy sector".
Pedro Tuesta, a Latin American analyst with Washington-based 4cast, said: "The surprise was the energy sector which is losing value in the face of higher production costs. It could grow to be a structural problem".
The central bank said seasonally adjusted IMACEC rose 0.3 percent from April. Last month, it said the IMACEC fell 0.3 percent in April compared with March. Chile's economy had gained momentum this year after last year posting 4 percent growth, which is lacklustre by Chilean standards.
In the first quarter of this year, the economy grew 5.8 percent versus the year ago period, posting its strongest rate since the second quarter of 2005. The weaker-than-expected IMACEC reading for May might dampen expectations of a central bank rate hike next week.