In 2023, Chile’s economy experienced an unexpected surge, successfully overcoming the anticipated sluggish growth that characterized the final quarter of the year.
During this period, the ciountry experienced a decline in the mining sector, magnifying the impact of steep interest rates and fluctuating demand.
The GDP edged up by 0.1% in the last quarter of 2023, slightly below the anticipated 0.2%.
Nevertheless, adjustments to the third quarter’s figures revealed a 0.2% annual growth, exceeding expectations of a minor decline.
This development presents a complex scenario for President Gabriel Boric, who is navigating through last year’s economic slowdown.
This slowdown was due to record-high interest rates, diminished confidence, and political challenges related to constitutional reforms.
Yet, signs like increased energy use and retail activity hint at a potential economic rebound. Analysts forecast Chile’s growth to surpass the Latin American average next year.
According to the Central Bank, the economy expanded by 0.4% year-over-year in the fourth quarter.
Despite a 2.9% drop in mining output, the broader economy saw a 0.6% growth.
The outlook is brightening due to the Central Bank’s rate cuts, which have decreased loan costs significantly since July’s end.
This move is set to align annual inflation with the 3% goal soon. The Chilean government’s outlook is notably positive. It expects a 2.5% GDP rise in 2024.
This anticipated growth aims to enhance the business landscape, attracting investments in key areas like lithium, shared Economy Minister Nicolás Grau in a recent interview.
However, the government’s slow progress on essential reforms continues to cloud investor sentiment regarding potential tax and pension adjustments.
The average Chilean feels stuck in the economy. The government is now contemplating buying numerous unoccupied apartments, while unemployment stands at 8.4%, well above the pre-pandemic figure of around 7%.