The Central Bank of Chile (BCCh) has revised its 2023 Gross Domestic Product (GDP) growth projection in its recent Monetary Policy Report.
The Bank now predicts that the GDP could experience a decline of up to 0.5% in a worst-case scenario, a downward adjustment from the 0.5% growth forecast in its previous report.
However, an upward potential of 0.25% growth in 2023 is also considered.
GDP expansion for 2023 is expected to fall within a range of 1.25% to 2.25%, and 2% to 3% in 2025.
The report notes that the economy is progressing in managing the macroeconomic imbalances accumulated over the years, which has helped moderate inflation.
Inflation rates have been decreasing and are projected to align with the 3% target.
The consumer price index (CPI) showed annual increases of 8.7% and 9.9% in May, with year-end CPI projected to be 4.2% in December.
Despite cost pressures easing, overall and core inflation remain high, affecting several sectors of the Chilean economy.
Domestic demand and economic activity are evolving as expected, with a greater decline in the durable component of private consumption.
The BCCh acknowledges that the decrease in inflation is partly due to monetary policy efforts.
If the economy continues to progress in the current direction, the monetary policy rate is expected to undergo reduction soon, the scale and timing of which will be based on the macroeconomic scenario and its implications for inflation.
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