Roundup: Chile economic activity, Mexico remittances

Economic activity in Chile rose 2.6% year-on-year in the final month of 2018, the central bank said.

The reading undershot market forecasts and is down from 3.1% registered in November.

In December, the mining sector weighed on growth, expanding 0.5%, compared with 1.3% forecast by statistics agency Ine, the local research unit of Brazilian financial services heavyweight Itaú said in a report. Meanwhile, the non-mining sector expanded 2.8%.

For the whole of the year, economic activity expanded 4.0%, largely in line with market expectations and the fastest pace since 2013. Definitive GDP data is due out in March.

GDP only grew 1.5% in 2017 and 1.6% in 2016, with investment and commodity prices key factors behind the slow growth rates.

Itaú expects growth this year to come in at 3.2%.

The research unit of Scotiabank Chile has the same forecast. "The consensus expects an expansion of 3.6% in 2019, above our projection of 3.2%," the unit said in a report. "To achieve an expansion of a modest 3.0%, we consider a significant seasonally adjusted acceleration of non-mining activities is required after what the second half of 2018 leaves us."

Rating agency Moody's expects growth to register at 3.6% this year. Moody's assistant VP Ariane Ortiz believes that, despite the slowdown, the government will continue chipping away at its fiscal deficit, which was 1.7% of GDP last year, smaller than the 1.9% authorities had forecast in September.

ALSO READ: Moody's outlines Chile challenges in wake of downgrade

***

Remittances to Mexico grew 10.5% last year to hit a record high of US$33.5bn.

In December alone, remittances totaled US$2.93bn, up from US$2.91bn in November.

Mexico has experienced growth in inbound fund transfers since 2016.

Remittances growth was 12.2% in 2017.

A key driver is the strength of the US labor market.

"We expect remittances to continue growing in 2019, even though there could be a moderation in the pace amid expectations of a slowdown in economic activity in the US," local lender Banorte said in a report.