Chile: Economy remains strong on the back of buoyant domestic demand
November 19, 2012
In the third quarter, GDP expanded 5.7% over the same quarter a year ago. The figure matched the revised expansion recorded in the second quarter (previously reported: +5.5% year-on-year), and overshot market expectations of a 5.4% rise. The stronger-than-expected growth figure came on the back of buoyant domestic demand, which compensated for a weaker external sector amid dampening global demand. Total consumption accelerated from a 5.1% increase in Q2 to a 5.9% expansion in Q3, owing to stronger private consumption (Q2: +5.4% yoy, Q3: +6.4% yoy). In addition, gross fixed investment accelerated to a robust 13.3% increase in the third quarter, up from the 9.0% expansion tallied in Q2. As a result, domestic demand expanded 8.0% in Q3, well above the 6.8% 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 contracted 3.4% in the third quarter, contrasting the 0.9% expansion seen in Q2. Meanwhile, imports decelerated slightly to a 2.5% expansion in the third quarter (Q2: +3.2% yoy). As a result, the external sector's net contribution to overall economic growth deteriorated from minus 1.0 percentage points in the second quarter to minus 2.5 percentage points in Q3. A quarter-on-quarter comparison, however, points to a slight deceleration in economic activity. According to seasonally adjusted figures, the economy expanded 1.4% in the third quarter, which was below the 2.0% increase recorded in Q2.