Chile Finance Minister Says 2012 GDP Growth Over 4% Would Be Good

• Chile finance minister: Signs of slowing growth in Europe, elsewhere create scenario in which Chile's economy will decelerate
• Larrain: Chile's economic growth rates of 6% in 2011 and 6.1% in February aren't sustainable
• Larrain: 'We may be close to full employment'

NEW YORK (Dow Jones) Any economic growth over 4% in 2012 would be "very good" for Chile considering the deterioration in the global economy, the country's finance minister said Wednesday.

Declining economic growth in Europe and signs of slowing growth elsewhere in the global economy create a scenario in which Chile's economy will decelerate, said Finance Minister Felipe Larrain, speaking in New York Wednesday.

Chile's central bank recently revised its 2012 gross-domestic-product growth expectation upward, to a range of 4% to 5% growth from a previous outlook for growth of 3.75% to 4.75%. The finance ministry also set a 5% growth target for 2012, but that looks "too ambitious" in the current world environment, Larrain said.

He still expects GDP growth in 2012 to range between 4% and 5% this year.

"Anything we do over 4% will be very good for us," he added.

Chile's economy expanded 6% in 2011, and recent data showed it expanded 6.1% in February, Larrain said, adding those rates aren't sustainable given the global backdrop.

"We don't expect to grow at this rate for the remainder of the year," he said.

Bringing more people to the labor force as the unemployment rate has declined is another challenge Chile's economy faces, the minister said, highlighting that the annual unemployment rate fell to 7.1% in 2011.

"We may be close to full employment," he said.

Larrain said the government aims to increase labor-force participation, especially among women, where there is the "biggest gap."

As for when Chile would return to international bond markets, Larrain reiterated that the government hasn't made any commitments to go back, but the possibility remains.

"You come to the markets not when you desperately need the funds, but when you're in a good position," he said.

The government probably won't go to international markets this year, but whether it will go next year "is something we will have to decide," he told reporters.

If Chile does tap international bond markets, it likely would be through both dollar- and peso-denominated bonds, and would consider issuing new maturities and adding liquidity to existing maturities, he said.

By Erin McCarthy