Chile: Economy expands at robust pace in Q3
November 18, 2010
In the third quarter, gross domestic product (GDP) expanded a strong 7.0% over the same quarter last year. The figure was above the 6.6% expansion recorded in the second quarter and was broadly in line with last month's LatinFocus Consensus Forecast of a 7.1% increase. The figure marked, in fact, the strongest expansion in five years. The improvement over the previous quarter reflected stronger domestic demand and a higher contribution from the external sector. Total consumption accelerated from a 9.3% increase in the second quarter to a 10.3% expansion in the third, fuelled by an improvement in private consumption (Q2: +10.7% year-on-year; Q3: +11.9% yoy). In particular of non-durable goods and services grew at a resilient rhythm. In contrast, gross fixed investment decelerated from a robust 29.3% expansion in the second quarter to an 18.5% expansion in the third. As a result, domestic demand eased slightly in the third quarter, expanding 18.2% annually (Q2: +19.9% yoy). In addition, the net contribution from the external sector to overall growth improved. Exports of goods and services improved from a 0.8% annual increase in the second quarter to an 8.0% expansion in the third. Meanwhile, imports decelerated slightly, expanding 34.4% in the third quarter (Q2: +34.9% yoy). As a result, the net contribution from the external sector to overall economic growth improved from a 14.2 percentage-point detraction in the second quarter to minus 12.6 percentage points in the third. At the sector level, the improvement was broad-based, as industry and services expanded at a faster clip than in the second quarter. Only agriculture decelerated compared to the previous quarter. A quarter-on-quarter comparison corroborates the resilient growth suggested by the annual figures. According to seasonally adjusted figures, the economy expanded a 1.96% over the previous quarter. The Central Bank expects economic growth to range between 5.0%-5.5% this year and 5.5%-6.5% in 2011.