Chile: Economy decelerates in Q2
August 19, 2013
In the second quarter, GDP expanded 4.1% over the same quarter last year, marking a deceleration compared to the 4.5% expansion recorded in the first quarter. While the expansion was slightly above market expectations of 4.0% growth in the economy, it marked the slowest increase since Q3 2011.
The slowdown recorded in Q2 came on the back of a deterioration in domestic demand (Q1: +7.2% year-on-year; Q2: +4.5% yoy). Total consumption inched up from a 6.1% expansion in the first quarter to a 6.4% rise in Q2, due primarily to an improvement in government consumption (Q1: +1.9% yoy; Q2: +3.6% yoy). In addition, growth in fixed investment moderated to 9.3% in Q2, down from the 9.5% expansion seen in the first quarter.
Meanwhile, exports of goods and services expanded 7.2% in the first quarter, which contrasted the 0.3% decrease seen in Q1. Imports also accelerated in the second quarter to an 8.4% rise (Q1: +6.6% yoy). As a result, the external sector's net contribution to overall economic growth improved, stepping up from minus 2.8 percentage points in Q1 to minus 0.8 percentage points in Q2.
In the latest Monetary Policy Report from September, the Central Bank stated that it expects economic growth to range between 4.0% and 4.5% both this year and next. LatinFocus Consensus Forecast panelists see economic activity growing 5.0% this year, which is up 0.2 percentage points from last month's forecast. For 2014, the panel expects the economy to expand 4.8%.
Author: Dirina Mançellari, Senior Economist