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.