Chile Economic Forecast

Flash data computed from monthly economic activity readings suggests that the economy expanded 0.3% quarter on quarter in Q3, buoyed by a sharp rebound in mining output and a more modest return to growth in the services sector. Moreover, GDP should have recorded year-on-year growth in Q3 for the first time since Q4 last year. Turning to the final quarter of 2023, economic activity likely continues to improve thanks to easing inflation and interest rates. In politics, on 30 October, the Constitutional Council finalized its proposal for a new constitution. The text will be submitted to voters in a December referendum. If approved, the constitution would secure the private sector’s dominant role in the economy. However, the latest polls suggest that the text will be rejected due to its right-leaning nature, which would prolong institutional uncertainty and likely weigh on investment.

Inflation edged down to 5.1% in September from August’s 5.3%. September’s reading represented the lowest inflation rate since August 2021 but was still well above the Central Bank’s 3.0% target. Inflation should fall further by the end of this year and into 2024 but is set to remain slightly above the Bank’s target through end-2024 amid monetary easing and elevated oil prices.