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Chile Economic Forecast

Chile Economic Outlook

Monthly economic activity data suggests that GDP returned to growth in quarter-on-quarter terms in Q4. Rebounds in mining and services were the key drivers; in contrast, manufacturing fell at a steeper pace. However, the economy still shrank in annual terms due to a tough base of comparison. Turning to Q1, activity appears solid. The economy confounded market expectations by expanding year on year in January thanks to a stronger mining sector. In addition, business confidence rose in both January and February, while higher copper prices since the start of the year will be buoying state coffers. In politics, on 8 March, Congress rejected the president’s flagship fiscal reform, which had looked to raise taxes to the tune of 3.6% of GDP. This will limit government expenditure and the state’s ability to respond to citizens’ demands for better public services, risking future social unrest.

Chile Inflation

Inflation dropped to 11.9% in February from January’s 12.3%, marking the lowest rate since May 2022. That said, inflation was still roughly four times the Central Bank’s 3% target. Inflation should ease further later this year amid high interest rates and reduced external price pressures, but remain above the Central Bank’s 3.0% target.

Chile Economic Data

2017 2018 2019 2020 2021
Population (million) 18.4 18.8 19.1 19.5 19.7
GDP (USD bn) 276 295 278 255 316
GDP per capita (USD) 15 15 14 13 16
GDP (CLP bn) 179 189 195 201 240
Economic Growth (Nominal GDP, ann. var. %) 6.3 5.6 3.3 2.9 19.3
Economic Growth (GDP, ann. var. %) 1.4 4.0 0.7 -6.1 11.7
Domestic Demand (ann. var. %) 2.9 5.0 0.9 -9.4 21.7
Total Consumption (ann. var. %) 3.8 3.6 0.7 -6.6 19.3
Private Consumption (ann. var. %) 3.6 3.8 0.7 -7.4 20.8
Government Consumption (ann. var. %) 4.7 3.1 0.6 -3.5 13.8
Fixed Investment (ann. var. %) -3.3 6.5 4.5 -10.8 15.7
Exports (G&S, ann. var. %) -1.0 4.9 -2.5 -0.9 -1.4
Imports (G&S, ann. var. %) 4.5 8.6 -1.7 -12.3 31.8
Manufacturing Production (ann. var. %) -1.0 2.8 0.8 -2.3 5.3
Retail Sales (ann. var. %) 4.6 3.8 -1.3 -3.5 28.4
Unemployment (% of active population, eop) 6.5 7.1 7.1 10.3 7.2
Unemployment (% of active population, aop) 6.9 7.3 7.2 10.6 9.1
Fiscal Balance (% of GDP) -2.8 -1.7 -2.9 -7.3 -7.7
Public Debt (% of GDP) 23.6 25.7 28.6 32.3 36.4
Inflation (CPI, ann. var. %, eop) 2.3 2.6 3.0 3.0 7.2
Inflation (CPI, ann. var. %, aop) 2.2 2.4 2.6 3.0 4.5
Monetary Policy Rate (%, eop) 2.50 2.75 1.75 0.50 4.00
10-Year Bond Yield (%, eop) 4.53 4.21 3.14 2.65 5.65
Exchange Rate (CLP per USD, eop) 615 694 752 711 852
Exchange Rate (CLP per USD, aop) 649 642 703 791 760
Current Account Balance (USD bn) -8 -13 -15 -5 -23
Current Account Balance (% of GDP) -2.8 -4.5 -5.2 -1.9 -7.3
Merchandise Trade Balance (USD bn) 7 4 3 19 10
Merchandise Exports (USD bn) 69 75 69 74 95
Merchandise Imports (USD bn) 61 70 66 55 84
Merchandise Exports (ann. var. %) 13.4 8.6 -8.1 7.6 28.0
Merchandise Imports (ann. var. %) 10.0 14.7 -6.6 -16.2 53.0
Foreign Direct Investment (USD bn) 4.1 10.3 15.2 9.6 12.7
International Reserves (USD bn) 39 40 41 39 51
International Reserves (months of imports) 7.6 6.8 7.4 8.5 7.3
External Debt (USD bn) 180 184 198 210 239
External Debt (% of GDP) 65.1 62.4 71.3 82.3 75.6

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