Chile’s economy grew by 1.8% in July, ending five months of decline, says the Central Bank.
This is the first growth shown by the Monthly Economic Activity Index or Imacec. The index covers 90% of the country’s economy and is a good predictor of GDP.
In the past months, the index showed negative growth. It was down 1% in June, 2% in May, 1.1% in April, 2.1% in March, and 0.5% in February.
Compared to last month, the unadjusted series grew by 0.3%. Overall, the year-on-year growth rate stood at 1.8%.
The services sector saw a 3.9% growth, mainly due to the education sector. This was because schools had an extra week of holidays in July 2022.
Goods production also increased by 3%. On the other hand, retail sales dropped by 2.5% compared to last year.
The main reason was fewer sales in supermarkets and specialty food stores.
This year, the Central Bank predicts GDP will range between -0.5% and 0.25%. They think a 3% growth rate could be possible by 2024.
The Chilean economy bounced back faster than expected after the pandemic. It surged by an impressive 11.7% in 2021.
However, in 2022, the growth slowed down to 2.4%.
To help the economy, the Bank cut the benchmark interest rate in July. It went from 11.25% to 10.25%, the lowest since October 2001.
The Chilean economy has seen its share of ups and downs recently. Before the pandemic, it was one of the most stable economies in Latin America.
However, social unrest in 2019 and the COVID-19 pandemic 2020 created significant economic challenges.
The government took various steps to stabilize the economy, including stimulus packages and interest rate adjustments.
These measures had a positive effect, contributing to the unexpected 11.7% growth in 2021.
Yet, despite the fast recovery, the recent slowdown indicates that the path to long-term stability is still uncertain.