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Chile Economic Forecast

Chile Economic Outlook

The economy contracted 0.3% on a seasonally adjusted quarter-on-quarter basis in Q2, contrasting Q1’s expansion but half the fall anticipated by monthly economic activity data. Government spending and exports declined, which more than offset a rebound in fixed investment and private consumption flatlining—the best performance in five quarters. GDP should grow in quarter-on-quarter and annual terms in Q3, on declining inflation and interest rate cuts by the Central Bank. Early signs are positive: In July, month-on-month economic activity grew further, while business sentiment rose to an 11-month high in August. Recent intense rains should be boosting hydroelectric output and alleviating the water shortage that has held back the mining sector. However, agricultural output has been hit; the government estimates that the rains in late August alone caused crop damages worth USD 1 billion.

Chile Inflation

Inflation came in at 6.5% in July (June: 7.6%), the lowest rate since October 2021 but still more than double the Central Bank’s 3.0% target. Inflation should fall further later this year but will remain above the Bank’s target amid monetary easing, recent peso weakening and an uptick in oil prices. Inflation is only expected to fall close to target towards end-2024.

This chart displays Economic Growth (GDP, annual variation in %) for Chile from 2013 to 2022.

Chile Economic Data

2018 2019 2020 2021 2022
Population (million) 18.8 19.1 19.5 19.7 19.9
GDP (USD bn) 295 278 255 316 301
GDP per capita (USD) 15,737 14,565 13,081 16,031 15,091
GDP (CLP bn) 189,435 195,752 201,429 240,371 262,593
Economic Growth (Nominal GDP, ann. var. %) 5.6 3.3 2.9 19.3 9.2
Economic Growth (GDP, ann. var. %) 4.0 0.7 -6.1 11.7 2.4
Domestic Demand (ann. var. %) 5.0 0.9 -9.4 21.7 2.3
Total Consumption (ann. var. %) 3.6 0.7 -6.6 19.3 3.1
Private Consumption (ann. var. %) 3.8 0.7 -7.4 20.8 2.9
Government Consumption (ann. var. %) 3.1 0.6 -3.5 13.8 4.1
Fixed Investment (ann. var. %) 6.5 4.5 -10.8 15.7 2.8
Exports (G&S, ann. var. %) 4.9 -2.5 -0.9 -1.4 1.4
Imports (G&S, ann. var. %) 8.6 -1.7 -12.3 31.8 0.9
Manufacturing Production (ann. var. %) 2.8 0.8 -2.3 5.3 -2.5
Retail Sales (ann. var. %) 3.8 -1.3 -3.5 28.4 -4.2
Unemployment (% of active population, eop) 7.1 7.1 10.3 7.2 7.9
Unemployment (% of active population, aop) 7.3 7.2 10.6 9.1 7.8
Fiscal Balance (% of GDP) -1.7 -2.9 -7.3 -7.7 1.1
Public Debt (% of GDP) 25.7 28.6 32.3 36.4 37.6
Inflation (CPI, ann. var. %, eop) 2.6 3.0 3.0 7.2 12.8
Inflation (CPI, ann. var. %, aop) 2.4 2.6 3.0 4.5 11.6
Monetary Policy Rate (%, eop) 2.75 1.75 0.50 4.00 11.25
10-Year Bond Yield (%, eop) 4.21 3.14 2.65 5.65 5.32
Exchange Rate (CLP per USD, eop) 694 752 711 852 852
Exchange Rate (CLP per USD, aop) 642 703 791 760 873
Current Account Balance (USD bn) -13.3 -14.5 -5.0 -23.2 -27.1
Current Account Balance (% of GDP) -4.5 -5.2 -1.9 -7.3 -9.0
Merchandise Trade Balance (USD bn) 4.4 3.0 18.9 10.5 3.8
Merchandise Exports (USD bn) 74.8 68.8 74.0 94.8 98.5
Merchandise Imports (USD bn) 70.4 65.8 55.1 84.3 94.7
Merchandise Exports (ann. var. %) 8.6 -8.1 7.6 28.0 4.0
Merchandise Imports (ann. var. %) 14.7 -6.6 -16.2 53.0 12.4
Foreign Direct Investment (USD bn) 13.0 14.4 10.8 13.2 19.8
International Reserves (USD bn) 39.9 40.7 39.2 51.3 39.2
International Reserves (months of imports) 6.8 7.4 8.5 7.3 5.0
External Debt (USD bn) 184 198 208 238 233
External Debt (% of GDP) 62.4 71.3 81.9 75.2 77.6

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