Chilean economy contracts 2% in May, fourth consecutive drop

The Chilean economy contracted 2% in May compared to the same month in 2022, which represents the fourth consecutive monthly drop, mainly due to the contraction of mining and commerce, the Central Bank reported on Monday.

The Monthly Index of Economic Activity (Imacec), an indicator that advances the subsequent calculation of the Gross Domestic Product (GDP), returned to show a negative year-on-year record, after the fall of 1.1% in April, 2.1% in March and 0.5% in February.

“The annual variation of the Imacec was explained by the drop in mining and, to a lesser extent, in trade”, according to the Central Bank.

In addition, he stated that “the seasonally adjusted series decreased 0.5% compared to the previous month and fell 2.2% in twelve months”.

In May, mining production fell 7.5% and industry, 0.8%. Commercial activity, meanwhile, presented a decrease of 4.2% in annual terms.

The contraction of the economy in May was within the margins that analysts had estimated.

In 2022, Chile’s GDP grew 2.4% compared to the previous year, a result explained by the moderation in consumer spending as the extraordinary resources received by households during the pandemic were depleted.

The Economic Commission for Latin America and the Caribbean (Cepal) estimated a 0.3% drop in GDP for Chile in 2023, below the regional average of 1.3%.

Chile, according to ECLAC, together with Haiti (-0.7%) and Argentina (-2%) will be the only three countries in Latin America with economic retraction this year.