Chile economic activity index posts surprise annual fall in February

SANTIAGO (Reuters) - Chile's IMACEC economic activity index dropped 0.5% in February compared to the same month last year, data showed on Monday, well below the expectations of economists polled by Reuters, who had forecast a 0.1% increase.

Compared with the previous month, the IMACEC index - a close proxy of gross domestic product - fell 0.3%, central bank data showed, with mining and service activities the main drags in the world's largest copper producer.

"These figures confirm that the economy is still in adjustment and that economic contraction still lies ahead," said Artur Claro, an economist at Econsult, who forecast some recovery to come only in the second half.

Andres Abadia, chief economist for Latin America at Pantheon Macroeconomics, said the mining sector has been hit by an array of shocks, including bad weather, which affected recent economic activity.

Nonetheless, economic momentum is likely to gradually gather speed this year, he said, thanks to gradually easing inflation pressures, lower interest rates and improving conditions for Chile's key exports.

(Reporting by Fabian Andres Cambero and Natalia Ramos; Writing by Gabriel Araujo and Steven Grattan)