Chilean economy falls 1% in December and 2023 GDP would close with a decline

The chilean economy registered a 1% drop last December compared to the same month in 2022, the Central Bank of the world’s largest copper producer reported this Thursday.

The Monthly Index of Economic Activity (Imacec), which brings together 90% of the country’s goods and services and is considered an advance estimate of the gross domestic product (GDP), registered a decline that surprised the markets, which expected a better performance in the last month of the year.

“This negative surprise, as a result of the drop in activity in several productive sectors, is far from what we want, but it does not change the reading of what the fourth quarter of 2023 and the year as a whole has been like.“said Finance Minister Mario Marcel.

2023, he added Marcel“It was a year in which the economy underwent a very profound adjustment, which allowed inflation to be drastically reduced, but which did not translate into a recession and, even less so, into a serious recession like the one anticipated.”.

With the decline in December, it is estimated that the Chilean GDP would have closed 2023 with a fall of 0.2%. Both the Government and different international organizations expected zero growth.

In a statement, the Chilean issuer explained that the fall of the Imacec in December is explained by the production of goods and trade, which fell 3.2% in December and 3.8%, respectively.

For its part, services increased 1.8% in annual terms, mainly due to transportation, the agency noted.

“The non-mining Imacec presented a contraction of 0.5% in twelve months, while in seasonally adjusted terms it fell 0.5% compared to the previous month”added the bank.

Chili It recovered faster than expected after the pandemic, with a historic GDP increase of 11.7% in 2021, but in 2022 it began to slow down and closed with a growth of 2.4%.

With inflation contained, which closed 2023 at 3.9%, and an aggressive cut in interest rates underway – which went from reaching their historical maximum of 11.25% due to the effects of the pandemic to the current 7.25% – the great challenge of Chile by 2024 is to grow again.

The Organization for Economic Cooperation and Development (OECD) estimates that Chilean GDP will expand by 1.8% this year, a forecast similar to that of the International Monetary Fund (IMF), while the Chilean Government is a little more optimistic and projects a expansion of up to 2.5%.