Chilean economic activity contracts for the third consecutive month

The Chilean economy contracted for the third consecutive month. The Central Bank of Chile announced this Tuesday that the Monthly Index of Economic Activity (Imacec) for November 2022 fell 2.5% compared to the same month of the previous year.

The fall in the Imacec, a benchmark for gross domestic product, was less than expected by analysts who pointed to a decline of up to -3.4% for the penultimate month of the year.

The seasonally adjusted series fell 0.8% compared to the previous month and fell 2.1% in twelve months. According to the issuing institute, the Imacec result was explained by the fall in trade and the manufacturing industry.

“The decrease in the Imacec in seasonally adjusted terms was determined by the performance of mining,” the Central Bank said in a statement.

The indicator of non-mining economic activity presented a decrease of 2.2% in twelve months, while in seasonally adjusted terms it contracted 0.2% with respect to the previous month.

PRODUCTION, TRADE AND SERVICES: THIS IS HOW THEY BEHAVED

The production of goods presented a fall of 2.4% in November, which is explained by the performance of the manufacturing industry and mining. Both registered decreases of 6.5% and 3.2%, respectively.

“In contrast, the activity of other goods presented a growth of 0.7%, mainly affected by the added value of electricity generation,” said the issuing entity.

In seasonally adjusted terms, the production of goods contracted 2.3% compared to the previous month.

Meanwhile, commercial activity presented a decrease of 8.8%, which was mainly due to retail trade, highlighting lower sales in supermarkets, specialized clothing, footwear and household equipment stores and large stores.

For its part, wholesale trade presented an almost general decrease, with sales of household goods and construction materials having the highest incidence.

Meanwhile, the seasonally adjusted figures showed a growth of 0.5% compared to the previous month, which is explained by wholesale trade.

Services increased by 0.1%, a result influenced by the performance of business and personal services.

Marco Correa, Chief Economist at BICE Inversiones, said that, in the same way, the activity would be showing the “necessary adjustment so that inflation manages to subside in the medium term.”

According to the economist, there would be negative variations in the Imacec until mid-2023. “It is likely that the maximum effects of the rate increase by the Central Bank of Chile, with a MPR (Monetary Policy Rate) located at 11.25%, will reflect during the first quarters of this year”.

The BICE Inversiones estimate is that GDP growth this year will be around 2.5%, while in 2023 we would see a contraction close to -1.5%.

With information from Bloomberg