Chile raises its GDP projection for 2024 due to the price of copper

The Government of Chile raised its national GDP growth projection for this year from 2.5% to 2.7% this Tuesday, an upward revision that is explained by the good data for the first quarter and an expected higher price of copperthe main export of the South American country.

“This improvement reflects the momentum accumulated since mid-2023 and a solid first quarter, hand in hand with the reduction in interest rates, a recovery in consumption and greater export dynamism.“, explained the Ministry of Finance in a statement.

For 2025, the Government maintained in the Public Finance Report for the first quarter an estimate of Chilean GDP expansion of 2.5%.

In a speech hours earlier in Parliament, the Minister of Finance, Mario Marcel, indicated that “The upward adjustment in the price of copper expected for the coming years provides relief in the margin for fiscal figures”.

The price of copper, a mineral of which Chili is the largest producer in the world, it would close this year at US$ 4.20 per pound, according to the report.

“In 2024, this higher price of copper also affects the exchange rate. By combining all these things we have a debt-to-GDP ratio below what had been projected.“, he indicated Marcelwho pointed out that this relationship is 40.6% of GDP and that as the fiscal goal of the year is met it will be reduced to 40.3%.

Regarding inflation, the Government estimated that it will close the year at 3.8%, higher than the 3.1% calculated in February.

The Government’s projections for GDP expansion this year are within the range of between 2% and 3% set last April by the Chilean Central Bank, which also raised the inflation forecast to 3.8%.

Chile 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 2.4% growth.

Contrary to what was forecast, in 2023 the contraction was avoided and the GDP closed with a timid growth of 0.2%.

Inflation, for its part, shot up to a historic 14.1% in August 2022 due to economic aid to alleviate the impact of the crisis and early withdrawals from pension funds, but the issuer applied an aggressive rate increase and the Inflation closed 2023 at 3.9%.