Chile: Economy slows further on weak domestic demand
August 18, 2014
In the second quarter, the economy grew 1.9% over the same period last year, which was well below the revised 2.4% expansion recorded in the previous quarter (previously reported: +2.6% year-on-year). The expansion overshot the 1.8% increase the market had expected; however, it recorded the slowest expansion since Q3 2009.
The quarterly reading reflected a slowdown in domestic demand while the external sector performed better compared to the previous quarter. Private consumption rose 1.9% in Q2 (Q1: +3.6% year-on-year) and recorded the slowest increase since Q3 2009. Government consumption decelerated from an 8.1% rise in Q1 to a 3.2% increase in Q2. In addition, fixed investment fell 8.1% in Q2, which was down from the 5.5% decrease recorded in Q1.
On the external side of the economy, exports of goods and services swung from a 3.5% increase in the first quarter to a 0.4% decrease in the second. In addition, imports decreased 9.1% (Q1: -4.6% yoy). As a result, the external sector’s net contribution to overall economic growth rose from 3.2 percentage points in the first quarter to 3.8 percentage points in the second quarter.
On a quarterly basis, the economy expanded 0.2% in seasonally-adjusted terms, which marked a deterioration over the 0.6% expansion recorded in the previous quarter.
Author: Dirina Mançellari, Senior Economist