SANTIAGO, Dec 5 (Reuters) - Chile's economic activity grew

at its fastest annual pace this year in October, data showed on

Wednesday, leading Finance Minister Felipe Larrain to predict

the economy will likely grow around 5.5 percent this year.

In October, Larrain's finance ministry forecast Chile would

grow 5 percent in 2012 and then slow to 4.8 growth next year,

following 6.0 percent growth in 2011.

Brisk domestic demand and investments have boosted growth in

Chile this year, despite easing demand from top trade partner

China and fallout from the euro zone's crisis, helping the

small, export-dependent economy largely defy forecasts for a

sharper slowdown.

The IMACEC indicator of economic activity, in

the world's top copper producer rose 6.7 percent in October,

compared with October of last year, speeding its pace of growth

from the upwardly revised 4.9 percent growth in September from

the year-earlier month, central bank data showed on Wednesday.

Manufacturing, retail and three additional working days in

October compared with a year-ago boosted economic activity, the

central bank said.

'The economy grew 6.7 percent. What does that show us? The

tremendous resiliency of the Chilean economy amid an adverse

external scenario,' Larrain told reporters. 'Remember that we

elaborated a contingency plan, that plan today is sitting atop a

desk in the Finance Ministry because fortunately we never had to

use it.'

' We're going to end the year of 2012 with better results

than had been expected,' he said. '(Economic) growth this year

will probably be around 5.5 percent.'

While investments and robust consumption have helped fuel

growth, Larrain said he doesn't see the small, export-dependent

economy overheating.

The October IMACEC data beat market expectations for 6.4

percent growth in a Reuters poll

'We can look at 2013 with optimism because this economy is

going to continue growing even if the problems in the world

persist,' Larrain said.

He added that inflation will end the year 'well below' the

midpoint of the central bank's 3.0 percent policy horizon

target.

Chile is seen posting zero inflation in November, following

two months of surprisingly high readings, as easing fuel and

transport prices likely counteracted strong food prices,

according to the median forecast in a Reuters poll.

The IMACEC fell a seasonally adjusted 0.5 percent in October

from September, compared with a downwardly revised 0.7 percent

increase in September. It was the first seasonally adjusted

month-on-month drop since January, when economic activity

contracted 1.1 percent.

The central bank calculates its month-on-month IMACEC data

in seasonally adjusted terms. A monthly gauge, the IMACEC

measures more than 90 percent of the components comprising

Chile's gross domestic product, which is published quarterly.

(Reporting by Santiago Newsroom and Moises Avila; Writing by

Anthony Esposito)

Keywords: CHILE ECONOMY/

(anthony.esposito@thomsonreuters.com)(+562-370-4253)

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