Chile: Economy moderated in the final quarter of 2010
March 18, 2011
In the fourth quarter, GDP expanded 5.8% over the same quarter the previous year. The figure was below the revised 6.9% expansion (previously reported: +7.0% year-on-year) recorded in the third quarter, but was broadly in line with last month's LatinFocus Consensus Forecast of a 5.6% increase. Total consumption decelerated slightly from a 10.9% increase in the third quarter to a 10.3% expansion in the fourth, owing to slower private consumption. In contrast, gross fixed investment accelerated from an 18.6% expansion in the third quarter to a 19.9% increase in the fourth. As a result, domestic demand eased in the fourth quarter, expanding 14.6% annually (Q3: +19.0% yoy). Meanwhile, the net contribution from the external sector to overall growth improved somewhat. Exports of goods and services decelerated from an 8.0% annual increase in the third quarter to a 5.1% expansion in the fourth. However, imports decelerated more markedly, expanding 26.0% in the fourth quarter (Q3: +36.8% yoy). As a result, the net contribution from the external sector to overall economic growth stepped up from minus 13.7 percentage points in the third quarter to minus 10.4 percentage points in the fourth. A quarter-on-quarter comparison corroborates the deceleration suggested by the annual data. According to seasonally adjusted figures, the economy expanded 0.93% over the previous quarter, slower than the 2.12% expansion in Q3. In the full year 2010, GDP expanded 5.2%, which contrasted the 1.7% contraction observed in 2009 and marked the fastest pace of expansion since 2005. The Central Bank expects economic growth to range between 5.5% - 6.5% this year.