MercoPress. South Atlantic News Agency

Chilean economy in recession: declines in consumption and investments

A median of a survey of economists conducted by the central bank this month estimated a fall in GDP of -0.50% by the end of the year

Chile’s economy has contracted for three consecutive quarters, with significant weakness in household consumption and decline in investments. The last negative figure was reported last week by the Central Bank, showing GDP contracted by -1.1% over the same period between April and June 2023. previous year. 

A median of a survey of economists conducted by the central bank this month estimated a fall in GDP of -0.50% by the end of the year. If this forecast comes true, Chile will be one of the few Latin American countries to end up with negative statistics in 2023.

Tomás Flores, the former undersecretary of the economy, said the South American country was suffering from a “recession” that was proving to be “longer than officials expected.” Flores also expects GDP to post a “slightly negative” result between July and September compared to the same quarter in 2022,

The Chilean economy started to show signs of fatigue in the second half of 2022, recording year-on-year variations of 0.2% in the third quarter and -2.3% in the last quarter of last year.

Along with this, inflation has moderated its trend over the past year. Therefore, the BCCH Council, chaired by Rosanna Costa, cut the interest rate by 100 basis points at the end of July amid macroeconomic conditions, leaving the door open for further cuts.