(Recasts, adds comments from Finance Minister, central bank)
SANTIAGO, Jan 5 (Reuters) - Chile’s economy, which depends heavily on copper exports and consumer demand, is on track to post its weakest annual growth in five years in 2014, central bank data showed on Monday.
The economy of the world’s top copper producer has been slowing for several quarters, hampered by cooling investment in the mining sector as the copper price has fallen, with the slowdown compounded by falling household consumption.
In November, Chile’s IMACEC economic activity index , encompassing about 90 percent of the economy tallied in gross domestic product figures, rose 1.3 percent from the same month a year ago, according to the central bank.
The growth was largely driven by value added services, and partly offset by continued falls in mining, manufacturing, and retail, the central bank said.
“Forecasts were made about a month ago that Chile’s economy would close out the year (2014) with growth of around 1.7 percent. This data confirms that,” said Finance Minister Alberto Arenas to reporters on Monday.
That would be the slowest economic growth since a 2009 recession.
In comparison with October, economic activity in November increased a seasonally adjusted 0.2 pct.
“The latest evidence suggests the real business cycle has stabilized at a subdued pace in recent months. We expect the economy to post a gradual, sluggish recovery in the quarters ahead, with growth firming slightly towards 2.5 percent on the back of stimulative monetary and fiscal policies,” said Tiago Severo, economist at Goldman Sachs.
To help prop up the economy, the central bank cut the key interest rate 200 basis points between October 2013 and October 2014, but recently indicated it would pause its easing cycle to give above-target inflation time to cool.
The bank sees the economy growing between 2.5-3.5 percent in 2015. (Reporting by Anthony Esposito; Additional reporting by Felipe Iturrieta Editing by W Simon)