(Updates with quotes from central bank report, context and copper price)
SANTIAGO, Sept 4 (Reuters) - Chile’s central bank on Wednesday slashed its 2019 economic growth forecast to a range of 2.25% to 2.75%, from 2.75% to 3.5%, as concerns over global trade tensions and dragging inflation mount in the world’s top copper producer.
Chilean finance officials had held on to the hope of growth over 3% as late as July, but the central bank said in its quarterly IPoM report that even a strong second half was unlikely to tip the balance.
“The expectation of stronger growth rates in the second half (of 2019) will not be sufficient to reverse the lack of activity in the first half of the year,” the central bank said in the report.
The central bank also revised down its 2019 year-end inflation forecast to 2.7%, from a previous prediction of 2.8%. Inflation hovered well below the bank’s target of 3% during the first half of the year.
The same concerns have prompted the central bank to twice slash interest rates since June, pushing them to their lowest level in nine years.
Chile, an Andean nation that produces nearly one-third of the world’s copper, has been especially hard hit by a downturn in global commerce and manufacturing. Copper exports can account for as much as 15% of Chile’s GDP.
The central bank estimated the average copper price at $2.70 per lb for 2019, down sharply from $2.96 in 2018, as trade tensions have continued to fester.
“Initially, it appeared that the impacts of the trade war would be most visible in the countries directly involved ... but supply chains have now transmitted them to many more economies,” the central bank said in its report. (Reporting by Dave Sherwood Editing by Chizu Nomiyama and Paul Simao)