Chile: Economy shows slowest growth in five years
November 18, 2014
In the third quarter, the economy grew 0.8% over the same period last year, which was less than half of the 1.9% expansion observed in the second quarter. In addition, the figure slightly undershot the 0.9% increase the market had expected and marked the slowest expansion since Q3 2009. The quarterly reading reflected a slowdown in both the domestic and external sectors.
Private consumption rose 2.0% in Q3, which was a tad below the 2.1% increase recorded in Q2, but marked the slowest increase since Q3 2009. In addition, growth in government spending slowed from 2.5% in Q2 to 1.8% in Q3. Fixed investment contracted 9.9%, which marked a deterioration over the 8.4% decrease observed in the previous quarter.
On the external side of the economy, exports of goods and services improved from a flat reading in Q2 to a 1.0% increase in Q3. In addition, imports contracted 7.2% over the same quarter last year, which was up from the 8.9% decrease observed in the previous quarter. As a result, the external sector’s net contribution to overall economic growth fell from 3.9 percentage points in the second quarter to 3.5 percentage points in the third quarter.
On a quarterly basis, the economy rebounded from a 0.1% contraction in Q2 to a 0.4% expansion in Q3, thus avoiding falling into technical recession.
Author: Dirina Mançellari, Senior Economist