Banco Central de Chile recorded annual GDP growth of 1.6% in the first quarter of 2019, down from 4.7% in the same period last year.
Mining activity for the quarter was down 3.6% year over year, while the non-mining sector grew 2.2%. The central bank currently expects growth for 2019 to hit 3.5%, a number it cut from 3.8% last month.
The dip in growth during the first quarter came as copper mining fell amid shrinking mineral extraction, partly due to heavy rains in February, that the central bank said halted production in the northern regions of the country.
The mining sector in Chile, which is the world's leading exporter of copper, "has revealed a certain level of instability, related to factors such as adverse climatic events and maintenance work that has caused several large mines ... to shut down temporarily," Banco Central de Chile said in a report.
Meanwhile, the Organisation for Economic Co-operation and Development cut its GDP growth projections for Chile to 3.4% in 2019 down from a previous estimate of 3.7%. Despite lowering the forecast, the organization noted Chile's "supportive financing conditions, high copper prices, the planned tax and labour reforms and positive business sentiment," which will likely spur investment.
"Low real interest rates and strong wage growth will support private consumption," the OECD said in latest Economic Outlook report, and noted that while stronger growth is likely to bolster employment, "inequality is still high, driven by persistent low intergenerational mobility" in the country.