Economists project recession in Chile as Q2 GDP misses forecasts
Reuters
Published Aug 18, 2022 08:52AM ET
Updated Aug 18, 2022 10:35AM ET
By Fabian Cambero and Gabriel Araujo
SANTIAGO (Reuters) -Chile's gross domestic product came in below expectations in the second quarter of 2022, central bank data showed on Thursday, leading economists to forecast a potential recession as pandemic-related stimulus is unwound.
The Andean country's economy grew 5.4% in the second quarter from a year earlier, but showed no growth from the previous three months in seasonally adjusted terms.
Economists polled by Reuters had expected a 5.7% increase year-on-year and a 0.3% rise over the previous quarter.
The performance highlighted Chile's struggle to grow as the central bank aggressively tightens its monetary policy to tame soaring inflation, which reached a near three-decade high last month.
"Chile's economy merely stagnated in Q2 and the chances are high that it will fall into recession over the second half of the year," Capital Economics' Latin America economist Kimberley Sperrfechter said in a note.
She also mentioned that building current account risks were set to keep the peso on the backfoot, with the local currency weakening 2.2% against the dollar following the latest economic figures.
The central bank said in a report that data were mixed among sectors, with personal care and transportation fuelling growth in services activities while mining and agriculture dropped on a yearly basis in the world's largest copper producer.
Andres Abadia, chief Latin America economist at Pantheon Macroeconomics, said Chile's economy performed poorly in the first half, reflecting tighter fiscal and monetary policy while domestic fundamentals deteriorated.
In the first quarter, Chile's economy had contracted 0.8% from the previous three months, losing ground after a solid recovery from the pandemic downturn last year.
"(The economy) is now practically on a technical recession," Abadia said. "The bad news is that leading indicators, including business and consumer confidence, suggest that the downtrend will continue over the coming quarters due to an array of shocks".
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.