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Chile GDP Q2 2023

Chile: GDP drops in the second quarter in both annual and quarterly terms

GDP contracted 0.3% on a seasonally adjusted quarter-on-quarter basis in the second quarter, contrasting the downwardly revised 0.4% expansion logged in the first quarter but half the fall that monthly economic activity data had anticipated. On an annual basis, GDP declined 1.1% in Q2, compared to the previous period’s 0.8% contraction.

Household spending was flat in seasonally-adjusted quarter-on-quarter terms in the second quarter, which marked the best reading since Q1 2022 (Q1: -2.5% s.a. qoq). Government consumption dropped at the sharpest pace since Q1 2023, contracting 2.1% (Q1: +4.4% s.a. qoq). Meanwhile, fixed investment rebounded 1.4% in Q2, contrasting the 0.8% contraction logged in the previous quarter and driven by higher machinery and equipment investment.

On the external front, exports of goods and services contracted 1.3% in Q2, marking the worst result since Q1 2022 (Q1: +0.5% s.a. qoq). Conversely, imports of goods and services bounced back, growing 3.2% in Q2 (Q1: -4.4% s.a. qoq).

Looking ahead, the economy should return to growth in Q3, abetted by easing inflation and interest rates.

Commenting on the Q2 data, Goldman Sachs’ Sergio Armella said:

“We highlight that domestic demand firmed notably during the second quarter, surprising to the upside. Although moderate, private consumption posted a non-negative sequential growth print for the first time in five quarters. Gross fixed capital formation also firmed. All in all, despite the drag from government spending, final domestic demand (i.e., excluding the change in inventories) also posted a non-negative sequential growth print for the first time in five quarters.”

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