Chile: Economy remains robust in Q2
August 20, 2012
In the second quarter, GDP expanded 5.5% over the same quarter a year ago. The figure came in above the 5.3% expansion recorded in the first quarter and was broadly in line with market expectations. The acceleration came on the back a stronger domestic demand, which more than compensated for a deterioration in the external sector amid weaker global demand. Total consumption accelerated from a 4.4% increase in Q1 to a 5.3% expansion in Q2, owing to stronger private consumption (Q1: +4.9% year-on-year, Q2: +5.5% yoy). In addition, gross fixed investment accelerated to a robust 8.0% increase in the second quarter, up from a 7.6% expansion in the second. As a result, domestic demand expanded 7.1% in Q2, well above the 4.5% increase seen in the previous quarter. Meanwhile, the external sector's net contribution to overall growth deteriorated as imports outpaced exports. Exports of goods and services decelerated from a 5.6% annual increase in the first quarter to a 1.2% expansion in Q2. In contrast, imports accelerated, expanding 5.2% in the second quarter (Q1: +3.6% yoy). As a result, the external sector's net contribution to overall economic growth swung from plus 0.6 percentage points in the first quarter to minus 1.8 percentage points. A quarter-on-quarter comparison corroborates the acceleration suggested by the annual figures. According to seasonally adjusted figures, the economy expanded 1.7% in the second quarter, which was above the 1.3% increase recorded in Q1. The Central Bank recently raised its 2012 GDP growth forecast to between 4.75% and 5.25%, up from its previous 4.0% to 5.0% range.