The government of Chili lowered this Wednesday by one tenth its growth forecast for the economy for 2023 up to 0.2% and forecast that average inflation will reach 7.8% year-on-year amid the adjustment of local activity after the rapid post-pandemic recovery.
By 2024, the Executive expects an increase in gross domestic product (GDP) of 2.5%while in 2025 the growth will be 2.6%according to the latest Public Finance Report (IFP).
“It must be said that in the second half of this year mining activity should grow anyway because apart from the fact that there are rather temporary factors that affected production in the first half of the year, Quebrada Blanca 2 starts operating in the second half. and that will be an additional boost to production”detailed the Minister of Finance, Mario Marcel during the presentation of the report in a parliamentary commission.
The Chilean economy recovered faster than expected after the pandemic, with a historic increase of 11.7% in 2021, but in 2022 it began to slow down and closed with growth of 2.4%.
The financial aid provided by the Chilean government to alleviate the impact of the crisis, as well as early withdrawals from pension funds, considerably boosted consumption and inflation, to which are added the effects of the war in Ukraine.
“The adjustment (of the economy) has been efficient because it has focused on domestic demand, where the balances were larger,” Marcel said.
The adjustment, said the official, “is the result of a monetary policy, also supported by fiscal policy, which allowed the inflation is down six and a half points from its peak in August 2022 (14.1% year-on-year)”.
According to the Executive’s estimates released this Wednesday, inflation will drop to 3.5% next year, and between 2025 and 2027 it will be below the goal of the 3% set by the Central Bank.
With these projections, the Government estimates that the public debt will stand at 183,727 million dollars in 2027, equivalent to a 42% of GDP.
Government economic forecasts are in the high range of the latest projections by the Central Bank of Chile, which in June also moderated its outlook, estimating that Chilean GDP would vary in 2023 between a -0.5% and a 0.25%.
Source: EFE
Source: Gestion
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