Chile’s economy experienced a downturn in October, with a 0.1% decline in the Central Bank’s Monthly Index of Economic Activity (Imacec) compared to September.
This drop contrasts with economists’ expectations of a 0.1% increase. The index did, however, show a 0.3% year-on-year rise, indicating some growth.
The country’s economic challenges stem from high borrowing costs, a slow labor market, and weakened trade with key partners like China.
To counter this, the Central Bank is cutting interest rates. This move aims to curb inflation without further economic harm.
Additionally, the government is fostering investments in sectors like lithium.
Analysts predict a modest recovery with a 2% growth in 2024, following a near-stagnant phase this year.
The mining sector, crucial to Chile’s economy, fell by 3.5% in October. However, other sectors saw growth.
Commerce increased by 1.6%, services by 0.6%, and industry by 1.3%. These mixed results reflect the uneven nature of the country’s economic recovery.
Rosanna Costa, President of the Central Bank, emphasized continued rate cuts. These are intended to stabilize inflation and, by extension, private consumption.
Despite these efforts, the overall economy shows only slight expansion. The gross domestic product grew by 0.6% from July to September, surpassing the expected 0.2% growth.
This economic report comes just before Chile’s constitutional plebiscite on December 17. This vote, the second in as many years, adds to the prevailing uncertainty.
Most polls suggest the public might reject the proposed constitution again.
Such a decision could extend the period of economic and political uncertainty, affecting future recovery efforts.
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