March 18, 2020 / 11:54 AM / 19 days ago

UPDATE 2-Chile economy contracts in fourth quarter, ravaged by protests

(Updates with additional context, details from central bank statement)

SANTIAGO, March 18 (Reuters) - Chile’s gross domestic product contracted by 2.1% in the fourth quarter of 2019 compared with a year earlier, the central bank said on Wednesday, its worst quarterly performance since 2009.

Chile´s once stable economy was ravaged by mass demonstrations and violent riots over inequality that began in mid-October of 2019. The protests, which continued through the end of the year, shut down businesses, closed schools, scared off tourists and hobbled public transportation.

The tough fourth quarter put 2019 annual GDP at 1.1%, the country´s most sluggish growth in 11 years and a major blow to the economy of the mining powerhouse.

GDP plunged 4.1% versus the third quarter, the central bank said, dragged down by slumping commerce, education and tourism sectors, all hard-hit by the protests. Domestic demand sank 3.3% compared with the fourth quarter of 2018.

The contraction was slightly larger than anticipated by a Reuters poll of analysts, which put GDP at -1.9%.

Chile’s economy now faces an even bigger challenge as the global coronavirus outbreak begins to erode expectations for 2020.

Credit Suisse expects Chile’s GDP to contract 1.5% this year compared with its earlier forecast of 1.8% growth. Chile is likely to be hard hit by weaker growth in China, one of its top export destinations, the financial services giant said. (Reporting by Dave Sherwood; Editing by Alex Richardson and Nick Zieminski)

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