Chile Economic Forecast

Chile Economic Outlook

September 15, 2020

The economy took a severe hit in Q2, as lockdown measures ravaged domestic activity. Household spending shrank by almost a quarter in annual terms, amid abysmal consumer sentiment and a rising unemployment rate, while fixed investment plunged at the sharpest pace in over 10 years. Available indicators suggest that the worst could be over, however. Economic activity contracted again in July, although at the softest pace in four months. Moreover, both business and consumer confidence ticked up in July and August, pointing to some improvement in sentiment. That said, in late August Moody’s downgraded the country’s outlook from stable to negative due to the impact of the pandemic and sustained uncertainty ahead of October’s national plebiscite. Meanwhile, on the political front, in early August congress passed a law to allow the Central Bank to buy treasury bonds, enriching the Bank’s toolkit.

Chile Economic Growth

The economy is projected to contract sharply this year, as the pandemic weighs on global demand for commodities and deals a blow to domestic activity. On top of that, uncertainty associated with October’s constitutional vote adds a downside risk. Counter-cyclical monetary and fiscal policies should cushion the economic blow, however. FocusEconomics panelists see GDP falling 5.9% in 2020, which is up 0.2 percentage points from last month’s forecast. In 2021, GDP is seen rebounding and growing 4.9%.

Chile Economy Data

2015 2016 2017 2018 2019
Population (million)18.018.218.418.819.1
GDP per capita (USD)13,68213,79315,08615,91514,766
GDP (USD bn)246251278298282
Economic Growth (GDP, annual variation in %)2.31.71.23.91.1
Consumption (annual variation in %)2.12.73.43.71.1
Investment (annual variation in %)-0.3-1.3-3.14.84.2
Industrial Production (annual variation in %)-  -  -  -  -  
Retail Sales (annual variation in %)3.13.84.34.41.6
Unemployment Rate6.36.56.67.47.2
Fiscal Balance (% of GDP)-2.1-2.7-2.8-1.7-2.8
Public Debt (% of GDP)17.321.023.625.627.9
Money (annual variation in %)10.610.14.79.48.2
Inflation Rate (CPI, annual variation in %, eop)4.42.72.32.63.0
Inflation Rate (CPI, annual variation in %)4.43.82.22.42.3
Inflation (PPI, annual variation in %)-  -  -  -  -  
Policy Interest Rate (%)3.503.502.502.751.75
Stock Market (annual variation in %)9.6-2.815.140.2-7.2
Exchange Rate (vs USD)708.6669.8615.4694.0752.0
Exchange Rate (vs USD, aop)654.6676.5648.9642.1703.3
Current Account (% of GDP)-2.3-2.0-2.3-3.6-3.9
Current Account Balance (USD bn)-5.7-5.0-6.4-10.6-10.9
Trade Balance (USD billion)3.44.97.44.64.2
Exports (USD billion)62.060.768.875.269.9
Imports (USD billion)58.655.961.570.665.7
Exports (annual variation in %)-17.3-2.113.39.3-7.1
Imports (annual variation in %)-14.6-4.710.114.8-6.9
International Reserves (USD)38.640.539.039.940.7
External Debt (% of GDP)65.465.864.961.870.2

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Chile Facts

Value Change Date
Bond Yield3.14-0.44 %Dec 30
Exchange Rate752.00.05 %Jan 01

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