Chile's Strong Economic Growth Likely to Hold in 2013


In the last three years Chile's economy has been one of the best performers in Latin America. And although there are clear signs that export oriented expansion has slowed down, domestic consumption has been on the rise.

Indeed, in April, the consumer confidence index reached 59.2 points, the 11th consecutive month of readings above 50 points, indicating that consumers are more optimistic about their future. In addition, retail sales have been increasing since August of 2009 and in March, it grew 10.2 percent yoy, the biggest expansion since December. Moreover, inflation has been on a downward trend for more than one year, and from December to April, stayed below the lower limit of its target range of 2 percent. Also, although in March, the jobless rate remained at 6.2 percent it is still much lower compared to 2011 levels. More importantly, in March, exports increased for the first time since the beginning of 2013. In particular, shipments of copper, Chile´s main exports rose 9.3 percent yoy. On the negative side, domestic demand has been growing at a higher pace than GDP, which would lead to a higher current account deficit.

 


In the fourth quarter of 2012, GDP grew 5.7 percent, driven by a 18.1 percent increase in investment and a 7.3 percent gain in private consumption. On a quarter over quarter basis, the economy expanded 1.5 percent, up from the 1.4 percent registered in the third quarter.
 
In April, consumer confidence increased to 59.2 points, the highest level since March of 2006. Moreover, in March, retail sales rose 10.2 percent yoy, mostly driven by a rise in the sales of motor vehicles, clothing, food and household appliances.
     

In April, inflation rate rose 1 percent, the fifth consecutive month below the lower limit of its official target range of 2 percent. On May 16th, the Central Bank of Chile decided to maintain its key policy interest rate unchanged for the 16th consecutive month.
 
In April, exports increased 4.9 percent to $6.906M from $6.583M registered in the same month of the previous year. Nevertheless, in the same period, trade surplus narrowed 47 percent from a year earlier, due to 12.5 percent surge in imports.

 

 


Duarte Ricardo | duarte.ricardo@tradingeconomics.com
5/17/2013 9:53:32 AM