Chile Economic Forecast

Chile Economic Outlook

November 6, 2018

Incoming data suggests that growth in the third quarter lost some steam on the heels of an impressive second quarter outturn, as export growth hit a near standstill in Q3. The deterioration in export growth marked the worst performance in over two years and came amid weaker global copper prices and increasing fragility in some of the country’s key trading partners. On the domestic front, inflationary pressures intensified in Q3; coupled with a worsening labor market—unemployment remained at a near seven-year high in July and August—this likely took a bite out of private consumption growth in the quarter. Meanwhile, on 28 October, President Sebastian Piñera announced plans to reform Chile’s highly privatized pension system, with the goal of increasing competition and boosting payouts to pensioners.

Chile Economic Growth

GDP is expected to grow at a healthy rate next year, in large part thanks to sturdy domestic demand. Prudent macroeconomic policy should keep inflation at bay, boding well for household consumption growth, while an overhaul of the tax system is expected to prop up investment activity growth. Downside risks to the outlook stem from the external environment, largely due to rising global protectionism and ongoing regional political and economic instability. FocusEconomics panelists see GDP expanding 3.4% in 2019, which is down 0.1 percentage points from last month’s forecast, and 3.0% in 2020.

Chile Economy Data

20132014201520162017
Population (million)17.617.818.018.218.4
GDP per capita (USD)15,79814,67713,65913,75215,118
GDP (USD bn)279262246250278
Economic Growth (GDP, annual variation in %)4.01.82.31.31.5
Consumption (annual variation in %)5.52.72.12.22.4
Investment (annual variation in %)2.2-4.8-0.3-0.7-1.1
Industrial Production (annual variation in %)-  -  -  -  -  
Retail Sales (annual variation in %)5.22.81.81.62.1
Unemployment Rate5.96.46.26.56.7
Fiscal Balance (% of GDP)-0.6-1.6-2.1-2.7-2.8
Public Debt (% of GDP)12.715.017.321.023.6
Money (annual variation in %)11.28.210.610.14.8
Inflation Rate (CPI, annual variation in %, eop)3.04.64.42.72.3
Inflation Rate (CPI, annual variation in %)1.84.44.43.82.2
Inflation (PPI, annual variation in %)-  -  -  -  -  
Policy Interest Rate (%)4.503.003.503.502.50
Stock Market (annual variation in %)8.4-22.89.6-2.815.1
Exchange Rate (vs USD)525.5606.9708.6669.8615.4
Exchange Rate (vs USD, aop)495.6570.8654.6676.5648.9
Current Account (% of GDP)-4.0-1.6-2.2-1.4-1.5
Current Account Balance (USD bn)-11.2-4.3-5.5-3.5-4.2
Trade Balance (USD billion)2.06.53.45.47.9
Exports (USD billion)76.875.162.060.769.2
Imports (USD billion)74.868.658.655.361.3
Exports (annual variation in %)-1.7-2.2-17.3-2.114.0
Imports (annual variation in %)-0.9-8.2-14.6-5.710.9
International Reserves (USD)41.140.438.640.539.0
External Debt (% of GDP)48.958.265.466.765.3

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Chile Facts

ValueChangeDate
Bond Yield4.77-0.44 %Nov 15
Exchange Rate673.70.05 %Nov 15
Stock Market26,270-0.67 %Nov 15

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