Chile: Economy grows at slowest pace in four years
May 19, 2014
In the first quarter, the economy grew 2.6% over the same period last year, which was slightly below the 2.7% expansion recorded in the previous quarter, but overshot the 2.4% increase the market had expected. The figure marked the slowest expansion since Q1 2010.
The quarterly reading reflected a slowdown in domestic demand while the external sector performed better compared to the previous quarter. Private consumption rose 3.7% in Q1 (Q4: +4.9% year-on-year) and recorded the slowest increase since Q4 2009. Government consumption accelerated from a 3.1% rise in Q4 to a 9.6% increase in Q1. In addition, fixed investment fell 5.0% in Q1, which was up from the 12.3% decrease recorded in Q4.
On the external side of the economy, exports of goods and services swung from a 0.9% decrease in the fourth quarter to a 5.4% increase in the first quarter. In addition, imports decreased 3.6% (Q4: -5.3% yoy). As a result, the external sector’s net contribution to overall economic growth rose from 2.0 percentage points in the fourth quarter to 3.5 percentage points in the first quarter.
On a quarterly basis, the economy expanded 0.8% in seasonally-adjusted terms, which marked an improvement over the 0.1% contraction recorded in the previous quarter.
Author: Dirina Mançellari, Senior Economist