Chile: Economic growth slows in Q4
GDP growth moderated to 0.1% on a seasonally adjusted quarter-on-quarter basis in the final quarter of 2023, from 0.8% in the third quarter. On an annual basis, economic growth lost momentum, cooling to 0.4% in Q4, compared to the previous quarter’s 0.6% expansion.
Household spending bounced back, growing 0.4% seasonally-adjusted quarter-on-quarter in the fourth quarter, which marked the best reading since Q4 2021 (Q3: -0.3% s.a. qoq). Lower inflation and interest rates likely supported private spending. Public spending deteriorated, contracting 0.3% in Q4 (Q3: +0.6% s.a. qoq). Fixed investment shrank at a quicker rate of 3.5% in Q4, following the 2.3% contraction logged in the previous quarter. Exports of goods and services dropped 0.9% in Q4 (Q3: +2.1% s.a. qoq), likely linked to lower copper output. Conversely, imports of goods and services dropped at a softer pace of 2.2% in Q4 (Q3: -2.7% s.a. qoq).
Our Consensus is for the economy to accelerate in Q1 thanks to looser financial conditions and lower inflation. In addition, the mining sector appears to be experiencing a recovery in Q1, as suggested by economic activity data for January.
On the reading and outlook, Goldman Sachs’ Sergio Armella said:
“After eight quarters of consecutive sequential decline in final domestic demand, our assessment is that the bulk of the macroeconomic adjustment is now behind. We highlight firmer activity in the second half of 2023 and a meaningful strengthening of activity in January where the IMACEC print was revised up to +2.0% mom sa from 1.7% before, even as the December contraction was similarly revised upwards to -0.6% mom sa from -1.0% mom sa before. All in, we revised our growth forecast for 2024 up by 0.5pp to 2.2% from 1.7% before.”
In contrast, Itaú Unibanco analysts are more downbeat:
“Private consumption is expected to be the primary activity driver this year, while still high interest rates and downbeat business confidence will weigh on investment. The combination of revisions to prior years’ growth numbers and a better print in 2023 will likely result in no significant alteration in the output gap estimate that was seen to be near closed. We expect GDP growth of 1.7% this year.”