Chile Economic Forecast

Chile Economic Outlook

September 12, 2018

The Chilean economy fired on all cylinders in the second quarter as robust domestic demand dynamics drove growth to a near six-year high. Household spending accelerated to a four-year high in Q2 amid subdued inflationary pressures and despite the stagnant job market. Investment activity also soared, propped up by buoyant manufacturing and commercial sectors, suggesting sustained momentum in non-mining activity in the quarter. The external sector’s performance, however, deteriorated as climbing imports—partly driven by strong demand for foreign capital goods—took a bite out of overall growth in Q2. Meanwhile, available data for Q3 appears slightly less upbeat. Economic activity decelerated markedly in July signalling the potential softening of external demand conditions and reflecting persistently weak labor market dynamics. Moreover, business sentiment fell to a year-to-date low in August while consumer confidence slipped into pessimistic territory in August, likely driven by the peso depreciation and a pick-up in inflationary pressures.

Chile Economic Growth

Solid growth is seen carrying over into the second half of the year on strong investment growth and elevated private consumption. However, the worsening of the external backdrop—mostly due to weaker copper prices—is seen as a major downside risk to growth next year. FocusEconomics panelists see GDP expanding 3.9% in 2018, which is up 0.1 percentage points from last month’s forecast, and 3.5% in 2019.

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 Yield4.84-0.44 %Sep 20
Exchange Rate667.00.05 %Sep 20
Stock Market27,535-0.67 %Sep 20

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