Chile Economic Forecast

Chile Economic Outlook

October 9, 2018

The economy appears to have performed well in Q3, albeit softening from the outstanding domestic demand-led outturn in Q2. Average economic activity came in below the Q2 level in July and August, reflecting a more challenging external environment and worsening labor market dynamics at home. Furthermore, average business sentiment deteriorated in Q3, although September saw a notable improvement compared to August, largely due to a surge in confidence in the mining sector. In a similar vein, average third-quarter consumer confidence was slightly below the average for Q2, against the backdrop of a weakening peso which weighed on consumers’ views regarding both their current and future economic situations. Nevertheless, despite the fall, retail sales jumped to a five-month high in August, signaling sustained reliance on household consumption. On the external front, exports fell marginally in August—the first contraction in 18 months—amid sustained copper price weakness and waning regional demand for Chilean exports.

Chile Economic Growth

Solid domestic demand should underpin growth next year, although it is expected to decelerate slightly. A stable inflationary environment will bolster private consumption, which, coupled with strong investment growth, should drive growth in 2019. However, the likely worsening of the external backdrop—mostly due to weaker copper prices and regional instabilities—remains a major downside risk to the outlook next year. Met the why particular panelists see GDP expanding 4.0% in 2018 and 3.5% in 2019, which is unchanged from last month’s forecast.

Chile Economy Data

20132014201520162017
Population (million)17.617.818.018.218.4
GDP per capita (USD)15,79814,67713,65913,75215,118
GDP (USD bn)279262246250278
Economic Growth (GDP, annual variation in %)4.01.82.31.31.5
Consumption (annual variation in %)5.52.72.12.22.4
Investment (annual variation in %)2.2-4.8-0.3-0.7-1.1
Industrial Production (annual variation in %)-  -  -  -  -  
Retail Sales (annual variation in %)5.22.81.81.62.1
Unemployment Rate5.96.46.26.56.7
Fiscal Balance (% of GDP)-0.6-1.6-2.1-2.7-2.8
Public Debt (% of GDP)12.715.017.321.023.6
Money (annual variation in %)11.28.211.611.14.8
Inflation Rate (CPI, annual variation in %, eop)3.04.64.42.72.3
Inflation Rate (CPI, annual variation in %)1.84.44.43.82.2
Inflation (PPI, annual variation in %)-  -  -  -  -  
Policy Interest Rate (%)4.503.003.503.502.50
Stock Market (annual variation in %)8.4-22.89.6-2.815.1
Exchange Rate (vs USD)525.5606.9708.6669.8615.4
Exchange Rate (vs USD, aop)495.6570.8654.6676.5648.9
Current Account (% of GDP)-4.0-1.6-2.2-1.4-1.5
Current Account Balance (USD bn)-11.2-4.3-5.5-3.5-4.2
Trade Balance (USD billion)2.06.53.45.47.9
Exports (USD billion)76.875.162.060.769.2
Imports (USD billion)74.868.658.655.361.3
Exports (annual variation in %)-1.7-2.2-17.3-2.114.0
Imports (annual variation in %)-0.9-8.2-14.6-5.711.9
International Reserves (USD)41.111.438.611.539.0
External Debt (% of GDP)48.958.265.466.765.3

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Chile Facts

ValueChangeDate
Bond Yield4.93-0.44 %Oct 18
Exchange Rate676.20.05 %Oct 18
Stock Market26,118-0.67 %Oct 18

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