Chile: Economy steams ahead in the first quarter
May 18, 2011
In the first quarter, GDP expanded 9.8% over the same quarter last year, the largest expansion in 15 years. The result benefited from a low comparison base reflecting the effects of the February 2010 earthquake. While the figure was well above the 5.8% expansion recorded in the fourth quarter, it was in line with last month's LatinFocus Consensus Forecast. Total consumption accelerated slightly from a 10.3% increase in Q4 2010 to a 11.6% expansion in Q1, owing to stronger private consumption. Meanwhile, gross fixed investment expanded 19.3% in the first quarter, virtually unchanged from the previous period. As a result, domestic demand remained strong, expanding 14.6%. Meanwhile, the net contribution from the external sector to overall growth improved somewhat. Exports of goods and services accelerated from a 5.1% annual increase in the fourth quarter to a 9.5% expansion in Q1. In contrast, imports decelerated, expanding 20.6% in the first quarter (Q4 2010: +26.0% year-on-year). As a result, the net contribution from the external sector to overall economic growth stepped up from minus 10.4 percentage points in the fourth quarter to minus 6.4 percentage points in the first. A quarter-on-quarter comparison points to a moderate acceleration, yet underscores the strength of the Chilean economy. According to seasonally adjusted figures, the economy expanded 1.31% over the previous quarter, following the 1.03% expansion in Q4. The Central Bank expects economic growth to range between 6.25% and 6.75% this year, and between 4.25% and 5.25% in 2012. Finance Minister Felipe Larrain stated that the country is experiencing ?a robust growth trend?, with GDP likely to expand more than 6% this year.