Skyline in Chile

Chile GDP Q1 2018

Chile: Chile’s economy expands at a five-year high rate in Q1

Chile’s economy kicked off the year on particularly strong footing, with GDP growing 4.2% year-on-year in the first quarter (Q4: +3.3% year-on-year), comfortably overshooting market expectations. The economy seems to have settled in a rapid and sustained recovery mode in recent months since picking up pace in the third quarter of last year, and the first quarter’s reading marked the strongest annual growth rate since Q1 2013. Nevertheless, as the economy’s poor performance in the first two quarters of 2017 weighed significantly on the overall result, GDP expanded a meager 1.5% in 2017.

According to data released by the Central Bank, the domestic sector continued to support economic activity growth at the beginning of the year: Domestic demand rose 3.8% in Q1, slightly down from the previous quarter’s 4.0%. Fixed investment jumped for the second month in a row (Q1: +3.6% yoy; Q4: +2.7% yoy), having rebounded at the end of last year after five consecutive quarters of contractions, led by a return to growth in construction investment and a healthy expansion in equipment and machinery investment. Furthermore, private consumption growth accelerated to the fastest pace in four years (Q1: +3.9% yoy; Q4: +3.0% yoy), with much-improved consumer confidence fueling household consumption. In contrast, government consumption growth moderated for the fourth consecutive month in Q1, from 3.4% in Q4 to 2.7%.

The external sector saw growth in exports surge to the highest rate in over four years (Q1: +7.2% yoy; Q4 +2.5% yoy). As a result, the sector added 0.4 percentage points to GDP growth in Q1 (Q4: minus 0.8 percentage points), as imports grew slightly more modestly (Q1: +6.1% yoy; Q4: +5.2% yoy). Looking at the industry-level performance, the robust expansion in the first quarter came on the back of the burgeoning mining sector; mining GDP surged 19.3% annually in Q1 (Q4: +6.8% yoy), comfortably outpacing 3.1% growth (Q4: +2.9% yoy) in non-mining GDP.

Looking ahead, growth will remain robust in the coming quarters but is likely to decelerate in the second half of the year as favorable base effects start to fade off. Nevertheless, the expansion in 2018 overall is projected to be significantly higher than in 2017, amid improved business and consumer sentiment that will spur private consumption and fixed investment growth. A favorable domestic monetary policy climate, an accelerating regional economic recovery, and a strengthening mining sector should further buttress growth this year.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest