Chilean economy shifts out of slow lane

Chile's economy picked up speed in July-December and the consensus among market observers is that the pace will accelerate this year.

Central bank data shows GDP expanded 3.3% year-on-year in Q4, faster than forecast, after growing 2.5% in Q3, pushing the full-year figure up to 1.5%.

The economy contracted 0.4% in the first quarter and grew 0.5% in Q2, according to revised central bank figures. In the first quarter the economy was impacted by factors such as a strike at the massive Escondida copper mine (pictured).

"All told, we remain comfortable with our forecast for GDP growth to pick up from 1.5% last year to 3.5% this year. This forecast is significantly above consensus expectations for growth of 3.0%," research firm Capital Economics said in a note.

Fourth quarter data also shows that gross capital formation bounced back, growing 2.7% from a contraction of 0.9% in Q3. Over the full year, the figure shrank 1.1%.

Capital Economics expects copper export revenue to rise 15% this year.

The election of center-right billionaire Sebastián Piñera is seen as positive for investor confidence.

During Piñera's first term in 2010-14 the country experienced growth rates of 4-5%, helped by high prices for Chile's main export, copper.

Local lender Bci, in a presentation this month, forecast GDP would expand 3.4% this year.

The investment unit of local financial services conglomerate Security expects the central bank to revise up its growth forecast for this year to 3-4% from 2.5-3.5% currently. Security is expecting GDP growth for 2018 to come in at 3.8%.

Chile economic activity index rose 3.9% in January, the biggest increase in two years.

The economy grew 1.6% in 2016, which was its slowest pace since 2009.