GDP records sharpest contraction since Q2 2020 in the third quarter
GDP declined 1.2% on a seasonally adjusted quarter-on-quarter basis in the third quarter, contrasting the 0.1% expansion logged in the second quarter. Q3’s reading marked the worst reading since Q2 2020. As such, activity continues to normalize following double-digit, stimulus-fueled growth in 2021.
Household spending fell 0.8% in the third quarter, which was above the second quarter’s 2.4% contraction. Public consumption dropped at the sharpest pace since Q2 2021, contracting 4.2% (Q2: -2.4% s.a. qoq), as the new government opted for fiscal prudence in order to shore up investors’ confidence and tame public debt. Meanwhile, fixed investment growth improved to 4.7% in Q3, from the 0.4% expansion logged in the previous quarter.
On the external front, exports of goods and services growth slowed to 0.1% in Q3 (Q2: +1.3% s.a. qoq). In addition, imports of goods and services contracted at a quicker pace of 6.5% in Q3 (Q2: -1.9% s.a. qoq).
On an annual basis, economic growth waned markedly to 0.3% in Q3, compared to the previous period’s 5.6% expansion. Q3’s reading marked the slowest growth since Q1 2021.
Looking forward, the economy is expected to continue to contract in quarter-on-quarter terms in Q4 2022 and Q1 2023, due to tight monetary policy, weakening economic momentum abroad and uncertainty over constitutional reform and the government’s policy agenda dampening investment.
Chile Total Consumption (ann. var. %) Data
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Total Consumption (ann. var. %) | 3.8 | 3.6 | 0.7 | -6.6 | 19.3 |