Chile GDP Q1 2020


Chile: Economy grows marginally in Q1 2020

May 18, 2020

Economic activity bounced back in the first quarter, with GDP expanding 0.4% on an annual basis (Q4 2009: -2.1% year-on-year).

Household spending fell 2.2% year-on-year in Q1 2020, improving from the 3.8% downturn seen in Q4 2019. Similarly, government spending declined at a milder pace of 1.0% in Q1 (Q4 2019: -7.4% yoy). Meanwhile, fixed investment growth slowed to 0.4% in Q1 from 2.7% in the prior quarter.

Exports of goods and services grew 1.4% in Q1 (Q4 2019: -3.5% yoy). In addition, imports of goods and services contracted at a steeper rate of 8.9% in Q1 (Q4 2019: -7.5% yoy), marking the worst outcome in over five years.

On a quarterly basis, economic growth rebounded to 3.0% in Q1 from Q4 2019's 4.1% contraction. Q1's reading marked the strongest increase since Q2 2010.

Despite Q1’s marginal expansion, the economy is poised to shrink this year as Covid-19 takes its toll. Economic activity is slated to contract at a severe rate in the second quarter on the Covid-19 fallout. Consumer and capital spending are set to fall amid prolonged social distancing, while stifled external demand should hammer exports. Moreover, uncertainty surrounding the upcoming constitutional process may restrain the pace of economic recovery following the end of the pandemic.

In its March assessment, the Central Bank projected the economy to contract between 1.5%–2.5% in 2020, while it sees growth of between 3.8%–4.8% in 2021. FocusEconomics panelists see the economy contracting 3.2% in 2020, which is down 0.7 percentage points from last month’s forecast. For 2021, they project the economy to grow 4.0%.


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Chile GDP Chart

Chile GDP Q1  20 20

Note: Year-on-year changes of GDP in %.
Source: Chile Central Bank (BCC) and LatinFocus Consensus Forecast.

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