SANTIAGO - Chile's economy contracted 3.4% in October from the same month a year ago, the central bank said on Monday, posting the single biggest drop in a decade as weeks of violent protests began sending shockwaves through the Chilean economy.
Riots in Chile began on Oct. 18 over a hike in metro fares but quickly spiraled into mass protests, arson and looting that have left 26 dead and upwards of $1.5 billion in losses for businesses. The peso has plummeted to a historic low, prompting multiple central bank interventions.
The IMACEC economic activity index, proxy for gross domestic product tallied on a monthly basis, fell 5.4% from September.
Scotiabank labeled it the "beginning of the bad news," in a note to investors, adding that the year-on-year drop in economic activity was "a drop not seen since the 2008 financial crisis."
Non-mining activity fell 4%, the bank said, marked by a sharp drop in education, transportation, business services and the hotel and restaurant sector.
The fall-off in activity far exceeded market expectations, said Mauricio Carrasco of consultancy Econsult.
"Going forward, restoring public order continues to be the biggest challenge," Carrasco said.
Much of Santiago, Chile's capital of 6 million, was shut near the end of October as riots and looting closed streets, central squares and many small businesses. Violence spiked again last week, prompting center-right President Sebastian Pinera to renew calls for deeper reforms and a crackdown on lawlessness.
Mining activity in the world's top copper producer nonetheless grew 2.0% compared with the same month in 2018, as new production from Codelco's Chuquicamata mine ramped up, boosting total output despite the mounting protests.
Chile's copper mines have mostly maintained production and kept operations running normally in the face of the unrest, with only scattered incidents reported.