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Chile: Economic growth slows in Q2 on plunging exports

August 18, 2015

In the second quarter, the economy grew 1.9% over the same period last year, which marked a slowdown compared to the 2.5% increase observed in Q1 but overshot market expectations of a 1.7% expansion. The deceleration mainly reflected a worse performance of the external sector and, to a lesser extent, slowdowns in household and public spending as well as a contraction in fixed investment.

Private consumption rose 1.6% in Q2, coming in below the 1.9% increase recorded in Q1. In addition, growth in government spending decelerated from 5.7% in Q1 to 3.7% in Q2. Fixed investment contracted at a steeper pace in Q2, dropping 3.0% in annual terms (Q1: -1.9% year-on-year).

On the external side of the economy, exports of goods and services swung from a 1.5% expansion in Q1 to a 4.9% decrease in Q2, marking the largest contraction in nearly six years. At the same time, imports fell 5.1% over the same quarter of the previous year (Q1: -2.3% yoy). As a result, the external sector’s net contribution to overall economic growth fell from 1.4 percentage points in Q1 to a lackluster 0.1 percentage points in Q2, marking the smallest contribution in two years.

On a quarterly basis, the economy decelerated form a 1.1% increase in the first quarter to a flat reading in the second quarter.

The Central Bank expects GDP to grow 2.5% this year. LatinFocus Consensus Forecast panelists see the economy growing 2.4% in 2015, which is unchanged from last month’s forecast. For 2016, the panel expects the economy to pick up the pace and expand 3.2%.


Author: Teresa Kersting, Economist

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Chile GDP Q2 2015

Note: Year-on-year changes of GDP in %.
Source: Chile Central Bank (BCC) and LatinFocus Consensus Forecast.


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