MercoPress. South Atlantic News Agency

Boric says Chile's economy will take off in 2024 after dodging recession

Growth is going to be noticed in the pockets of families, said Boric

Chilean President Gabriel Boric Font said Monday that his country's economy would “take off” this year after dodging recession in 2023 and reaching a meager 0.2% growth.

“Last year, despite all the difficulties, Chile grew and this year we have the deep conviction that we are going to recover in a sustained way a path of growth and that is going to be noticed in the pockets of families,” said Boric. “This is the year of take-off,” he added.

Boric created late last year the so-called “Cabinet of Economic Growth”, to boost investment projects both public and private as well as mining and construction.

Chile's Central Bank reported Monday that the gross domestic product (GDP) expanded by 0.4% in the last quarter of the year and closed with positive growth, despite previous projections.

“The annual variation of the GDP was revised upwards”, going from -0.2% to +0.2%. The revision was mainly due to “the incorporation of information not available for previous estimates and to the reconciliation process of the supply and use tables of the quarterly national accounts.”

It also estimated in its latest Monetary Policy Report (IPoM) that GDP would expand between 1.25% and 2.25% in 2024, while the Government is more optimistic and aims at 2.5%. The World Bank, for its part, projects an expansion of 1.8 % in 2024.

Domestic demand fell by 4.2% last year in annual terms, due to a contraction in household consumption, which fell by 5.2%, reflecting a drop in spending on non-durable and, to a lesser extent, durable goods. The index was also affected by a 5.3% drop in investment, while in contrast there was an increase in spending on services.

Regarding foreign trade, both exports and imports of goods and services declined, with a net positive effect on the Chilean GDP. Exports decreased by 0.3% in the reference period due to lower shipments of goods such as copper, boards, and wood panels, while the sale of services abroad registered an upward trend. Meanwhile, the 12% contraction in imports was influenced by lower imports of goods, “particularly vehicles and fuels”.

Total gross savings amounted to 23% of GDP in nominal terms, “composed of domestic savings of 19.4% of GDP and external savings of 3.6% of GDP, corresponding to the current account deficit of the balance of payments”.

Finance Minister Mario Marcel said that Monday's figures came in a context of “controlled inflation and with a balance of payments current account that has returned to its historical average.”

”These national accounts leave us in a very good starting point to undertake the challenges of 2024,″ he added.

The Chilean economy recovered faster than expected after the pandemic, with a historic increase of 11.7% in 2021, but in 2022 it began to slow down and closed with a growth of 2.4%. Economic aid to alleviate the impact of the crisis, as well as early withdrawals from pension funds, triggered inflation, which reached a record high in August 2022, at 14.1%.