Why the second semester will be “more favorable” for the economy…

SANTIAGO – Chile’s economy has contracted for three consecutive quarters, reflecting significant weakness in household consumption and a decline in investment.

The last negative figure was reported on Friday by the Central Bank of Chile in its National Accounts report, which showed gross domestic product (GDP) contracted by -1.1% over the same period between April and June 2023. previous year. Nothing could better show that the economy is weakeningHerman González, macroeconomic coordinator at Claps UC, told Bloomberg Line.

Taking into consideration GDP contraction in seasonally adjusted terms (-0.3%)The economist distinguishes a “break” in the trend of the small recovery recorded in the two previous quarters.

Meanwhile, growth in economic activity for January-March 2023 was revised down to 0.4% compared to the previous quarter, half of what was first reported in the previous version of the report from the issuing company and led by Finance Minister Mario. Marcel confirmed in May that Chile’s economy was in a recovery phase.

to Gonzalez The quarter-on-quarter decline “should attract attention because it basically indicates a weak economy”.

Tomás Flores, the former undersecretary of the economy, drew less optimistic conclusions and opined that the South American country was suffering from a “recession” that was proving to be “longer than officials expected.”

What to expect throughout the year

The median of a survey of economists conducted by the central bank in August estimated a fall in GDP of -0.50% by the end of the year. If this forecast comes true, Chile will be one of the few Latin American countries to end up with negative statistics in 2023.

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Specifically, Flores expects GDP to post a “slightly negative” result between July and September compared to the same quarter in 2022, and González points to “very positive” numbers in the last three months of the yearSince the comparative basis is less required.

The economy started to show signs of fatigue in the second half of 2022, recording year-on-year variations of 0.2% in the third quarter and -2.3% in the last quarter of last year. Along with this, inflation has moderated its trend over the past year. Therefore, the BCCH Council, chaired by Rosanna Costa, cut the interest rate by 100 basis points at the end of July amid macroeconomic conditions, leaving the door open for further cuts.

Clapes UC’s macroeconomic coordinator’s expectation is that, on average, there will be growth in activity for the rest of the year. “The market expects the same. LThe intensity of that recovery or what positive figures we will see in the second semester is highly doubtful.“, said.

When Marcel learned that the monthly index of economic activity (Imacec) for June, a measure of GDP, fell 1.0% year-on-year (less than expected), he said it was “likely” that the indicator for July would already be there. “A positive number” record.

Gonzalez admits it’s possible, but promises it’s possible Most likely to happen by the end of 2023. “In our view, it is possible that the figures for the second half of the year will even offset the decline in the first half of the year and we end up with slightly positive annual growth,” he said.

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