In seasonally adjusted terms, the reduction was explained as “primarily the performance of trade, partially offset by an increase in mining.”
Reuters. Chile’s gross domestic product (GDP) fell 1.1% in the second quarter compared to the same period last year, according to data released by the central bank on Friday, marking three consecutive quarters of declines.
Seasonally adjusted GDP fell 0.3% in the quarter.
In the first quarter, Chile’s economy shrank by 0.8% compared to the same period of the previous year according to revised figures, while in the fourth quarter of 2022 it shrank by 2.3%.
“From the perspective of origin, the decline in gross domestic product (GDP) was mainly affected by activities in the trade, transport, mining and manufacturing sectors,” the agency said.
In contrast, electricity, gas, water and waste management, especially power generation, partially offset the former result.
In seasonally adjusted terms, the reduction was explained as “primarily the performance of trade, partially offset by an increase in mining.”
The central bank also reported that domestic demand fell by 5.6% due to lower household consumption and investment. Household consumption fell 6.1%, with all components falling.
A Reuters poll estimated a 0.6% contraction in seasonally adjusted GDP and an average of -1.4% on an annualized basis.
In recent months, the world’s largest copper producer’s economy has been adjusting after a rapid recovery from the COVID-19 pandemic, which has also led to strong inflationary pressures.
In late July, the central bank kicked off the monetary easing cycle with a 100 basis point cut in interest rates, which had been maintained at a technical high of 11.25% for nine months in the face of rising prices.
However, the bank stressed that the inflation issue has not been resolved.
The quarterly numbers “keep the door open for the Fed to continue its easing cycle in the coming months,” wrote William Jackson, chief emerging markets economist at Capital Economics.
“This weakness should give the central bank more room to cut interest rates,” he added. “We think the policy (cash) rate will drop to 7.50% from its current 10.25% by the end of the year, which puts us at the moderate end of the spectrum.”
Post Views: 7
