(Adds analyst comments, more context)

SANTIAGO, Dec 1 (Reuters) - Chile's IMACEC economic activity index, a close proxy of gross domestic product (GDP), dropped 1.2% in October from the same month last year, the central bank said on Thursday.

That was in line with market expectations, according to a Reuters poll of economists, as recession looms in the world's largest copper producer after a rapid post-pandemic recovery.

When compared with the previous month, the IMACEC index rose 0.5%, boosted by mining activity gains, but economists do not expect a positive reading on a sequential basis to prevent a broader economic slowdown.

"The very low level of demand indicators, coupled with the weakness of sentiment surveys, suggest that activity likely will fall again over the next three months," said Pantheon Macroeconomics' chief Latin America economist Andres Abadia.

According to the central bank, the latest figures were explained by a drop in commerce and the manufacturing industry, an effect partially compensated by the mining sector.

Data

on Wednesday

had already shown a 9.2% decrease in Chile's manufacturing output in October, while copper production rose 2.2% year-on-year in the period - a set dubbed by JPMorgan economist Diego Pereira as "a mixed bag".

IMACEC's fresh figures represented the second consecutive drop in Chile's economic activity, which had already slipped 0.3% in September on a yearly basis, the first drop since February 2021.

IMACEC accounts for nearly 90% of the South American country's GDP.

Chile's central bank expects the local economy to expand between 1.75% and 2.25% this year, before a downturn that would lead to a contraction of between 0.5% and 1.5% in 2023. (Reporting by Natalia Ramos and Gabriel Araujo; Editing by Steven Grattan)