Chile’s economic recession worsened, expectations deteriorated, say experts

The economic recession has accentuated in the second semester in Chile, and expectations are “very deteriorated”, warned Chilean experts on Thursday, August 18, after the local Central Bank reported that the Gross Domestic Product (GDP) grew 5.4% in the second quarter of this year, compared to the same period of 2021, a figure below market expectations.

Guillermo Pattillo, an academic at the University of Santiago de Chile, explained that the second quarter figure would represent the last positive variation in quarterly terms this 2022 compared to the previous year.

“The probability that the Chilean economy will have a mild recession, that is, a lapse that at least takes a semester or more of product fall, is high”, explained the expert.

The academic stressed that Chile may have “a form of recession in the remainder of 2022 and part of 2023. This process of adjustment of the economy remains essential after the off-trend growth of 2021.”

“It is improbable that the economy will converge smoothly to its trend level. Expectations are very deteriorated,” he lamented.

For his part, Chilean economist Jorge Selaive explained on his Twitter account that “the deceleration of consumption and depreciated peso are enough to generate gradual convergence”.

The expert underlined that the data delivered this day by the Chilean Central Bank explained that “the deceleration is accentuated and the second half of the year will be somewhat worse”.

The Central Bank informed on Thursday in its National Accounts report that the Gross Domestic Product grew by 5.4% in the second quarter of this year, compared to the same period of 2021. The figure is lower than the first quarter’s expansion and was below market expectations.

With information from Xinhua