Chilean President Gabriel Boric Font expressed optimism on Monday regarding his country’s economic prospects, stating that after narrowly avoiding recession in 2023 and experiencing modest growth of 0.2%, the economy is poised for a significant turnaround this year.
“Despite facing numerous challenges last year, Chile managed to achieve growth, and we are now firmly convinced that we will embark on a sustained growth trajectory this year, which will directly benefit families,” Boric remarked. “This is the year we will see significant progress,” he emphasized.
To bolster economic growth, Boric established the “Cabinet of Economic Growth” late last year, aimed at stimulating investment in both public and private sectors, particularly in mining and construction.
The Central Bank of Chile announced on Monday that the gross domestic product (GDP) expanded by 0.4% in the final quarter of the previous year, resulting in overall positive growth, contrary to earlier forecasts.
“The annual GDP variation has been upwardly revised from -0.2% to +0.2%,” the Central Bank reported, attributing the revision to the inclusion of new data and the reconciliation process of national accounts.
According to the latest Monetary Policy Report (IPoM), the Central Bank anticipates GDP growth ranging between 1.25% and 2.25% in 2024. In contrast, the government’s outlook is more optimistic, targeting a growth rate of 2.5%. Meanwhile, the World Bank projects a more conservative expansion of 1.8% for the same period.
In terms of domestic demand, there was a 4.2% decline in the previous year, primarily driven by a reduction in household consumption, which decreased by 5.2%. Conversely, there was an increase in spending on services, partially offsetting the decline in consumer goods.
Exports and imports of goods and services also experienced a downturn, with exports decreasing by 0.3% due to reduced shipments of key commodities such as copper, while service exports saw an upward trend. Imports, on the other hand, contracted by 12%, largely due to decreased purchases of vehicles and fuels.
Total gross savings amounted to 23% of GDP in nominal terms, comprising domestic savings of 19.4% and external savings of 3.6%, corresponding to the current account deficit.
Finance Minister Mario Marcel welcomed Monday’s economic figures, noting that they reflect a context of controlled inflation and a return to the historical average for the current account balance.
“The robust performance of our national accounts sets a strong foundation for tackling the challenges of 2024,” Marcel added.
Chile’s economy rebounded faster than anticipated after the pandemic, posting a historic growth rate of 11.7% in 2021. However, growth slowed to 2.4% in 2022, attributed in part to economic support measures and early pension fund withdrawals, which contributed to inflation reaching a record high of 14.1% in August 2022.
