Chile: Economy slows in the second quarter but remains robust
August 18, 2011
In the second quarter, GDP expanded 6.8% over the same quarter last year. While the figure was well below the revised 10.0% expansion recorded in the first quarter (previously reported: +9.8% year-on-year), it overshot market expectations of a 6.5% expansion. Total consumption decelerated from a 12.4% increase in Q1 to an 8.6% expansion in Q2, owing to weaker private consumption. Meanwhile, gross fixed investment decelerated notably from a 20.4% increase in the first quarter to an 11.3% expansion in the second. Despite the slowdown, domestic demand remained strong, expanding 9.4%. Meanwhile, the net contribution from the external sector to overall growth continues to improve. Exports of goods and services accelerated slightly from a 9.5% annual increase in the first quarter to a 10.2% expansion in Q2. In contrast, imports decelerated, expanding 14.8% in the second quarter (Q1: +21.2% year-on-year). As a result, the net contribution from the external sector to overall economic growth stepped up from minus 6.7 percentage points in the first quarter to minus 4.3 percentage points in the second. A quarter-on-quarter comparison corroborates the deceleration suggested by the annual figures, yet underscores the resilience of the Chilean economy. According to seasonally-adjusted figures, the economy expanded 1.39% over the previous quarter, only slightly below the 1.56% expansion in Q1. The Central Bank expects economic growth to range between 6.25% and 6.75% this year and between 4.25% and 5.25% in 2012. Finance Minister Felipe Larrain stated that the economy will expand around 6.5% this year, amid booming domestic demand, before expanding around 5% in 2012.