Chile Economic Forecast

Chile Economic Outlook

January 21, 2020

The economy likely contracted in the fourth quarter after widespread demonstrations rocked the country at the end of last year. Declines in economic activity in both October and November hint that GDP contracted for the first time in two-and-a-half years in Q4, with household spending and fixed investment likely taking the brunt of the unrest as suggested by record-low consumer and business confidence. The external sector was seemingly less affected, however, as plunging merchandise imports led to a higher trade surplus in the quarter. On 13 January, the government valued the infrastructure damages caused by the unrest at USD 1.4 billion, while also disclosing details of a tax reform which should partly compensate for fiscal concessions to protesters. The overhaul, which is yet to be approved by Parliament, contemplates tax hikes for high earners and additional progressive taxes on real estate assets.

Chile Economic Growth

Prospects for this year have deteriorated since the wake of the protests in October. While fiscal concessions should uphold private consumption, fixed investment is likely to decline as the uncertainty surrounding the drafting of a new constitution deters business activity. Meanwhile, exports are seen rebounding as easing trade tensions support copper prices. FocusEconomics panelists see GDP expanding 1.7% in 2020, which is down 0.5 percentage points from last month’s forecast, and 2.5% in 2021.

Chile Economy Data

2014 2015 2016 2017 2018
Population (million)17.818.018.218.418.5
GDP per capita (USD)14,69913,68013,78815,17816,088
GDP (USD bn)261246250279298
Economic Growth (GDP, annual variation in %)1.82.31.71.34.0
Consumption (annual variation in %)2.72.12.63.04.0
Investment (annual variation in %)-4.8-0.3-1.2-2.74.7
Industrial Production (annual variation in %)-  -  -  -  -  
Retail Sales (annual variation in %)2.81.81.62.13.1
Unemployment Rate6.36.36.56.66.9
Fiscal Balance (% of GDP)-1.6-2.1-2.7-2.71.6
Public Debt (% of GDP)15.017.321.023.525.6
Money (annual variation in %)8.210.610.14.79.4
Inflation Rate (CPI, annual variation in %, eop)4.64.42.72.32.6
Inflation Rate (CPI, annual variation in %)4.44.43.82.22.4
Inflation (PPI, annual variation in %)-  -  -  -  -  
Policy Interest Rate (%)3.003.503.502.502.75
Stock Market (annual variation in %)-22.89.6-2.815.140.2
Exchange Rate (vs USD)606.9708.6669.8615.4694.0
Exchange Rate (vs USD, aop)570.8654.6676.5648.9642.1
Current Account (% of GDP)-1.6-2.3-1.6-2.1-3.1
Current Account Balance (USD bn)-4.3-5.7-4.0-6.0-9.2
Trade Balance (USD billion)6.53.44.97.44.7
Exports (USD billion)75.162.060.768.975.5
Imports (USD billion)68.658.655.961.570.8
Exports (annual variation in %)-2.2-17.3-2.113.49.6
Imports (annual variation in %)-8.2-14.6-4.710.115.1
International Reserves (USD)40.438.640.539.039.9
External Debt (% of GDP)58.265.466.765.261.6

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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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