GDP in Chile
Chile - GDP
GDP growth weakens in the first quarter
Activity softened markedly in the first quarter, with GDP expanding 7.2% year-on-year (Q4 2021: +12.0 yoy). Q1's reading marked the worst reading since Q1 2021. On a seasonally-adjusted quarter-on-quarter basis, economic activity declined 0.8% in Q1, contrasting the previous quarter's 1.7% expansion and driven by declines in both the mining and non-mining sectors. Q1's reading marked the worst reading since Q2 2020.
The downturn in annual growth was broad-based, with private consumption, public spending, fixed investment and exports all weakening. Private consumption growth fell to 13.9% in Q1 (Q4 2021: +16.1% yoy), as inflation rose and the impulse from past fiscal stimulus and pension drawdowns faded somewhat. Government consumption growth moderated to 9.1% in Q1 (Q4 2021: +11.0% yoy). Fixed investment growth fell to 8.8% in Q1 (Q4 2021: +19.9% yoy), amid slowdowns in construction and machinery investment.
Exports of goods and services contracted 1.4% in Q1 (Q4 2021: +0.6% yoy amid lower exports of copper and fruit. In addition, imports of goods and services growth waned to 17.5% in Q1 (Q4 2021: +38.4% yoy).
Looking forward, in Q2 our analysts expect a further slowdown in year-on-year growth and another contraction in quarter-on-quarter terms. Economic headwinds are increasing as inflation and interest rates rise, while uncertainty over the outcome of the constitutional process will likely subdue business investment. Moreover, the government of Gabriel Boric is so far maintaining a prudent fiscal stance, meaning the growth impulse from government spending will be much lower than last year.
On the longer-term outlook, analysts at the EIU commented:
“Although we assume that macroeconomic policy will remain prudent for now, the new constitution is likely to include reforms that will weigh on the business environment. In this context, gross fixed investment will decrease to an average of 2.3% in 2023-26 (below pre-pandemic levels). Overall, real GDP growth will moderate to an average of 2.1% in 2023-26, which is low by Chile's standards.”
FocusEconomics panelists see the economy growing 2.1% in 2022, which is down 0.2 percentage points from last month’s forecast. For 2023, they see the economy expanding 1.0%.
Chile - GDP Data
|Economic Growth (GDP, annual variation in %)||2.3||1.7||1.2||3.9||1.1|
5 years of economic forecasts for more than 30 economic indicators.
Chile GDP Chart
Source: Chile Central Bank and FocusEconomics calculations.
|Bond Yield||3.14||-0.44 %||Dec 30|
|Exchange Rate||752.0||0.05 %||Jan 01|
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June 9, 2022
Copper prices fell in May, coming in at USD 9,395 per ton on average, compared to the prior month’s USD 10,174 per ton.
June 8, 2022
Consumer prices rose 1.20% in May over the previous month, moderating from the 1.40% increase logged in April.
June 7, 2022
At its 7 June meeting, the board of the Central Bank of Chile (CBC) decided to hike the monetary policy rate by 75 basis points to 9.00%, taking total tightening this year to 500 basis points. The Bank’s decision was driven by a desire to rein in inflation and inflation expectations.
June 1, 2022
Economic activity expanded 6.9% year-on-year in April (March: +6.4% yoy).
June 1, 2022
Business confidence came in at 46.5 in May, down from April's 47.5.