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Mercados

UPDATE 2-Chile's economic activity in April posts 'historic drop'

(Updates with additional quotes from Finance Minister, context)

SANTIAGO, June 1 (Reuters) - Chile’s economic activity plunged 14.1% in April from the same month a year ago, the central bank said on Monday, the steepest drop in at least 34 years as the world´s top copper producer reels from the impact of the coronavirus.

The bank’s IMACEC economic activity index encompasses about 90% of the economy tallied in gross domestic product figures.

“This is a historic drop of a magnitude that we had not registered since this index was created,” Finance Minister Ignacio Briones told reporters following the data release.

Non-mining activity plunged an unprecedented 15.5%, as the service, trade, construction and manufacturing sectors were all hammered by measures to contain the spread of the coronavirus, the central bank said in a statement accompanying the figures.

Mining output, however, continued to escape the worst of the crisis, slipping just 0.1% in April. Miners at many of Chile´s sprawling copper deposits have maintained production by reducing staff, drawing on reserves and implementing strict sanitary measures at work sites.

Chile, once among Latin America´s most stable economies, is now in the throes of the pandemic, reporting nearly 100,000 total coronavirus cases and more than 1,000 deaths.

Briones warned on Monday of a “very significant drop” in the country´s economic activity in May as well, as much of the capital Santiago, Chile´s economic engine, faced spiraling infections and a lockdown.

The number of new cases emerging daily has quadrupled in the past month, to upwards of 4,000 per day, bringing the country´s healthcare system to the point of collapse.

Economists anticipate a sharp contraction of Chile´s gross domestic product in 2020, and unemployment - already at a 10- year high - is expected to hit double-digits by year´s end.

Briones said the bad news in April would likely force another look at the government´s annual predictions.

“Naturally this will prompt an update of our growth scenarios for 2020. We are working on that,” Briones told reporters.

Reporting by Dave Sherwood; Additional reporting by Natalia Ramos and Fabian Cambero; editing by Andrea Ricci and Steve Orlofsky

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