Chile’s gross domestic product (GDP) could be the worst in all of Latin America and the Caribbean by 2023 if forecasts by the Economic Commission for Latin America and the Caribbean (ECLAC) come to pass.
It estimates that the Chilean economy will grow by 2.2 percent in 2022 but will contract by 0.9 percent the following year, meaning it will be the only country in the region with a decline in GDP.
The Chilean economy suffered a 6% decline in 2020, the worst year in terms of quarantine due to the Covid-19 pandemic, but posted record growth of 11.7% in 2021.
Chile stands in stark contrast to estimates for the rest of the region, as ECLAC predicts Latin America and the Caribbean will grow by 1.4% in 2023.
However, the United Nations organization projects that regional growth will slow, as LAC growth is expected to be 3.2% in 2022.
Taking all of South America as a subset, the figures are similar: 3.4% would increase South American GDP in 2022 and 1.2% in 2023.
Apart from Chile, Haiti is the only Latin American country not expected to grow in 2023.
In the case of the Caribbean nation, however, no decline is expected, but instead, zero movements (0%).
Cepal’s expected decline for Chile in 2023 is in line with the World Bank’s projections of a 0.5% decline in Chile’s GDP next year. This year, the World Bank expects Chile to grow by 1.8%.
Meanwhile, the International Monetary Fund (IMF) estimates that Chile’s economic output could fall by 1% in 2023 after growing by 2% in 2022.
“In South America, some countries are particularly affected by the low dynamism of China, which is an essential market for their exports of goods.
This is the case, for example, of Chile, Brazil, Peru, and Uruguay, which send more than 30% of their merchandise exports to China (Chile 40%).”
In addition, the agency argues that South America will also be affected by falling commodity prices and constraints on public policy space.
High inflation has affected real incomes, and the impact on private consumption was already evident in some countries in the second half of this year.