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Originally published Wednesday, April 3, 2013 at 10:10 AM

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Chile's Pinera says no risk of economy overheating

Chile's fast-growing economy is robust, healthy and can continue to expand, free from risks of overheating, President Sebastian Pinera said on Wednesday.

Associated Press

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SANTIAGO, Chile —

Chile's fast-growing economy is robust, healthy and can continue to expand, free from risks of overheating, President Sebastian Pinera said on Wednesday.

The economy of the world's No.1 copper producer has been growing on the back of its strong mining industry and local demand.

But the finance minister said this week that Chile might take measures to avoid having the economy expand so quickly that productive capacity can't keep pace with demand, boiling over into inflation. The central bank on Tuesday elevated its estimate for growth to 5.5 percent for 2013.

"The bulk of investment in Chile is financed through Chilean savings and only a small part with foreign savings, besides that, the current account deficit is being financed not through debt but through direct foreign investment," Pinera told foreign correspondents at the presidential palace.

While he said the government has a "constant concern of not overheating the economy, I'm convinced that the Chilean economy is growing healthy, strong and in a sustainable way, and that it can continue to grow at this rhythm."

Pinera also said his government continues to monitor the inflation rate, which last year ended at 1.5 percent, below the target rate of between 2 and 4 percent.

Chile has won worldwide acclaim for its growth, productive workforce and transparent institutions. But the Andean nation of 16.6 million people has one of the world's sharpest gaps between rich and poor.

"There's no doubt that for Chile to become a developed country without poverty, we need to grow around 6 percent, not over one, two or three years, but many more years," said Pinera, a billionaire who is in his last year in office.

Strong growth and a nearly six-year-low jobless rate have recently lifted Pinera's approval ratings.

But frequent protests demanding free education, a wider distribution of Chile's copper riches and the return of ancestral lands to Mapuche Indians, have troubled Pinera, who remains the most unpopular Chilean leader since Gen. Augusto Pinochet ended his bloody dictatorship in 1990.

Chileans will vote for a new president on Nov 17.

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Luis Andres Henao on Twitter: https://twitter.com/LuisAndresHenao

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