Chile: Economy booms in the third quarter
November 18, 2021
GDP growth slowed slightly to 17.2% year-on-year in the third quarter, from 18.1% in the second quarter, due to a less favorable base effect. However, on a seasonally-adjusted quarter-on-quarter basis, economic growth improved to 4.9% in Q3, following the previous period's 1.6% expansion. Q3's reading marked the best result since Q4 2020. The strong quarter-on-quarter growth was spurred by the loosening of Covid-19 restrictions, fiscal stimulus and pension drawdowns.
Looking at the annual variation in GDP components, household spending increased 27.5% in the third quarter, which was below the second quarter's 35.6% expansion. Government consumption growth moderated to 9.7% in Q3 (Q2: +19.2% yoy). Meanwhile, fixed investment growth improved to 29.8% in Q3, from the 20.7% expansion recorded in the prior quarter.
Exports of goods and services rebounded, growing 1.7% year-on-year in the third quarter, which marked the best reading since Q2 2020 (Q2: -1.9% yoy). Conversely, growth in imports of goods and services was stable at 38.3% in Q3.
Turning to Q4, growth will slow as the post-lockdown boom fades and Covid-19 cases tick back up, while political uncertainty in the run-up to the elections could keep a lid on investment intentions.
Looking further ahead, Sergio Godoy, chief economist at STF Capital, said:
“The current pace of recovery does not look sustainable, and we expect a strong pullback next year. Our current estimation for 2022 GDP growth is 2%, with risks skewed to the downside.”
Author: Oliver Reynolds, Economist