By Jude Webber
Official data showing that the Chilean economy grew at its fastest monthly rate in a decade must be music to the ears of Sebastián Piñera, the new president. His election pledge to boost annual growth to 6 per cent always sounded ambitious, and looked especially so after the country’s devastating earthquake at the end of February.
But what the April data revealed was a speedier-than-expected business rebound. Bloomberg puts this in context:
The economy expanded 8.2 percent in April from March, the biggest increase since 1996, and 4.6 percent from a year earlier, the central bank said today on its website. It was the quickest annual growth since September 2008 and double the median forecast of 10 economists surveyed by Bloomberg.
April’s expansion comes after the economy shrank the most since 1996 in March following an 8.8-magnitude earthquake on Feb. 27 that caused almost $30 billion in damage. The faster- than-forecast expansion added to speculation that the central bank will raise its benchmark interest rate June 15 for the first time since September 2008.
The data raise two questions. 
One: where does the economy go from here? Felipe Larraín, the economy minister, says the only way is up. In a statement, he remarked:
This is very good news … The market was expecting a rather lower figure and this shows the Chilean economy is recovering … this recovery will be even stronger still in the second half of the year.
The other question is whether this will encourage the Central Bank to begin raising interest rates – as some on its board have been itching to do for the past two months – at the next meeting on June 15. It would be the first rise since September 2008. May inflation data are out tomorrow, and could prove key to the bank’s decision.
Meanwhile, there could be more good news for the government this week in the Senate, which looks at the government’s $8.4bn plan for earthquake reconstruction, including higher taxes. At least some analysts believe the Senate will give its approval.
