Reuters: Financial Services and Real Estate: UPDATE 1-Chile says not yet time to use economic contingency plan

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UPDATE 1-Chile says not yet time to use economic contingency plan May 31st 2012, 23:51 Thu May 31, 2012 7:51pm EDT (Updates with fresh quotes, details) By Anthony Esposito SANTIAGO May 31 (Reuters) - Chile's government is not planning to implement an economic contingency plan yet, but is ready to act if Europe's financial crisis deteriorates, Finance Minister Felipe Larrain said on Thursday. Larrain said the economy was healthy and that a gradual slowdown was in line with expectations. Chile drew up the contingency plan last year to safeguard liquidity and jobs in case of a new global financial crisis. "We don't think this is the moment to implement a contingency plan," Larrain said. "Our economy continues to expand, and in April's data it is clear that it is occurring at a more moderate pace." "The slowdown is within expectations, but the economy remains very stable." The government drew up the emergency plan last year to mitigate the impact of Europe's growing crisis, which included plans to issue $6 billion in debt locally. Officials said earlier this year the government could tap sovereign wealth fund savings if necessary. The contingency plan is aimed at protecting liquidity, jobs and fostering investment, but details are scant. Chile's economy grew by 0.9 percent in March from February and expanded by 5.2 percent from the same month a year ago, according to the country's IMACEC indicator of economic activity published earlier this month. That reading topped market expectations for growth of 4.0 percent. However the economy is seen slowing gradually as Europe's woes weigh on global market sentiment. Chile's economic activity likely grew at a slower clip in April against a backdrop of financial turbulence in Europe, a scenario which should keep the central bank from moving interest rates in coming months, a Reuters poll showed on Thursday. Chile's small, export-dependent economy is bracing for a slowdown in global demand, especially from its top trade partner, China. The central bank forecasts the economy will expand between 4.0 percent and 5.0 percent this year, slowing from last year's 6.0 percent growth, in tandem with the global economy. (Editing by Simon Gardner and Christopher Wilson) Link this Share this Digg this Email Reprints

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