RIO DE JANEIRO, BRAZIL – Chile’s Gross Domestic Product (GDP) grew 0.3 % in the first quarter of 2021 compared to the same period of the previous year, in the middle of the second wave of the pandemic that pushed the health system to the limit and forced to confine a large part of the country, the Central Bank reported on Tuesday.
According to the Central bank, domestic demand for the country increased 6.7% year on year due to a strong increase in trade and, to a lesser extent, an increase in agricultural and forestry activities and the manufacturing industry.
Meanwhile, services and construction activities “were impacted by the effects of the sanitary emergency, which affected mobility and the normal operation of productive establishments”.
Economic growth with respect to the previous quarter was 3.2%, driven by an increase in service activities, the business sector, and transportation, the Central Bank added.
Domestic spending grew, spurred by increased consumption and higher household spending, “influenced by economic measures to support households and partial withdrawals of pension funds”.
Since the beginning of the pandemic, the Government has allocated 18 billion dollars in social aid. At the same time, the country approved on three separate occasions the withdrawal of 10% of pension funds to provide liquidity to families.
“With respect to foreign trade, exports fell by 5.1 %, mainly due to lower exports of copper and services,” the Central Bank pointed out.
Copper production, which represents about 10 % of the country’s GDP, is contracted by 2.1% due to “the poor performance of copper deposits and a decrease in the number of workers at work”.
The red metal, of which Chile is the world’s leading producer, has been key in the economic recovery after the health crisis, and its price is at historic highs, close to US$5 per pound.
In 2020, the Chilean economy contracted by 5.8% due to the pandemic – the worst decline in four decades – and the Central Bank estimated GDP growth in 2021 between 6% and 7%.
With more than 1.2 million infected and almost 28,000 deaths in total, the South American country experienced a second wave of Covid-19 in March and April, which led to the confinement of more than 90% of the population, but which has stabilized in the last two weeks.
The authorities began to lift restrictions in May, and at the same time, the vaccination process, one of the fastest in the world, was speeded up.
With 19 million inhabitants, Chile has inoculated 60% of the population with a single dose, and almost 50% are fully vaccinated with both doses.