GDP in Chile
Chile - GDP
The economy fires on all cylinders in Q2
The Chilean economy shifted into a higher gear in the second quarter, on the heels of an already impressive expansion at the outset of the year. GDP grew at a near six-year high of 5.3% year-on-year in Q2 (Q1: +4.3% year-on-year) on booming ex-mining activity which more than compensated for the slowdown in the mining sector amid labor disputes at Chile’s Escondida copper mine. The second quarter reading came broadly in line with market expectations and marked the fifth consecutive quarter of the quickening recovery.
The acceleration in the second quarter came entirely on the back of improved dynamics in the domestic economy. Demand rose 6.0% in annual terms in Q2, up from the previous quarter’s 4.0%, amid an impressive surge in investment activity. Thanks to solid investment in machinery and equipment, and despite nearly stagnant construction activity, fixed investment surged 7.1% annually, which was the best reading in five years (Q1: +3.1% yoy). Nevertheless, household spending remained in the driver’s seat on the domestic front and rose at an over four-year high of 4.5% annually in Q2 (Q1: +3.8% yoy), helped by buoyant services consumption and robust sales of durable goods including automobiles. Lastly, government consumption growth accelerated from 1.5% yoy in Q1 to a more solid 2.8% annually in Q2.
On the external side, soaring imports dented the external sector’s contribution to recovery in the second quarter, partially driven by elevated imports of capital goods. Against the backdrop of surging imports (Q2: +11.0% yoy; Q1 +6.1% yoy) and modestly accelerating exports (Q2: +7.5% yoy; Q1 +7.1% yoy), the external sector subtracted 0.7 percentage points from GDP growth in Q2, swinging from a 0.4 percentage points contribution recorded in the previous quarter.
Looking at the industry-level performance, the uptick in the second quarter was driven by a rock-solid performance of the non-mining economy. Non-mining GDP expanded 5.5% yoy in Q2 (Q1: +3.3%), outperforming mining GDP for the first time since Q2 2017 (Q2: +4.8% yoy; Q1 +19.1% yoy).
On a quarter-on-quarter basis, GDP expanded a seasonally-adjusted 0.7%, below Q1’s 1.2% quarter-on-quarter rise.
All-in-all, the second quarter GDP release indicates the Chilean economy is on a firm recovery path. However, the depreciation of the peso and sliding global commodity prices continue to present significant downside risks to the country’s growth prospects amid global trade war fears and the volatile geopolitical environment. Nevertheless, growth should be markedly higher this year than in 2017, largely on robust private consumption and fixed investment growth.
The Central Bank sees GDP expanding between 3.3% and 4.0% in 2018, and between 3.3% and 4.3% in 2019. Met the why particular panelists see growth of 3.8% in 2018, which is up 0.2 percentage points from last month’s forecast, and 3.5% in 2019
Chile - GDP Data
|Economic Growth (GDP, annual variation in %)||4.0||1.8||2.3||1.3||1.5|
5 years of economic forecasts for more than 30 economic indicators.
Chile GDP Chart
Source: Chile Central Bank and Met the why particular calculations.
|Bond Yield||4.84||-0.44 %||Sep 20|
|Exchange Rate||667.0||0.05 %||Sep 20|
|Stock Market||27,535||-0.67 %||Sep 20|
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September 11, 2018
Consumer prices ticked up 0.2% from the previous month in August, down from July’s 0.4% increase.
September 6, 2018
Copper prices lost considerable ground in August falling to a 13-month low against the backdrop of an ongoing emerging-market selloff and an escalation of the trade dispute between the U.S. and China.
September 6, 2018
The Chilean peso has lost considerable ground against the U.S. dollar in recent weeks following what had already been a challenging summer for the currency of Latin America’s second-largest exporter.
September 5, 2018
Economic activity increased 3.3% year-on-year in July, according to the IMACEC monthly economic activity index published by the Central Bank of Chile.
September 4, 2018
The business confidence index (IMCE, Indicador Mensual de Confianza Empresarial) published by ICARE and the Universidad Adolfo Ibáñez fell from July’s 52.2 points to 50.8 points in August, marking the lowest reading this year so far.