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Chile grows 2.4% in 2022, less than expected


Gabriel Boric's Minister of Finance, Mario Marcel, assures that the current outlook looks "more favourable"

In the main port of Chile, Valparaíso, La Marina bakery preserves its original façade and the oldest Chilean oven in the Valparaíso Region.Pin Campaña

Chile has closed 2022 with lower growth than expected, as reported by the Central Bank on Monday.

The Chilean Gross Domestic Product (GDP) grew 2.4% last year, while projections made on the basis of monthly economic activity pointed to 2.7%.

For the autonomous body, this result is explained by the behavior of the last three months of the year, "which affected the estimate of added value of transportation services."

The Minister of Finance of the Government of Gabriel Boric, Mario Marcel, assured that the adjustment of the economy was deeper, but that "this has already happened."

“Now the economy is beginning to head towards a recovery path and, at the same time, with downward inflation.

In other words, we have a scenario that is beginning to be more favorable," said the head of the fiscal coffers,

In Chile there is talk that 2022 was a year of normalization.

In 2020, the first year of the pandemic, the contraction was 6.1%.

Then, in 2021, there was a jump of 11.7%.

In 2022, with 2.4%, the economy normalizes its activity with respect to its behavior prior to the covid-19 crisis.

For the Central Bank, the growth of domestic demand stood out in the first half of the year –driven above all by consumption– but then slowed down in the second part of the year.

Marcel referred to the external elements that could affect the Chilean economy in 2023. “Of course, elements or risks always arise, such as this situation in the international financial markets, but I think we are on the right track.

What we hope is to be able to move forward with the measures that the Government has proposed”, says Marcel regarding key measures for the Executive, such as the tax reform, which two weeks ago failed in its first test in the Chamber of Deputies.

The Government hopes to find a consensus with the opposition to move it forward, because it is crucial to fulfill its promises.

The economist explained that 2.7% growth in 2022 was not reached "mainly due to a lower figure for mining activity during the year and a significant drop in transportation activity in the last part of 2022," which It was produced by "the payment of commissions for the situation of Latam in Chapter 11 [US bankruptcy law]".

Along with reiterating that Chilean banking is solid to face external turbulence, Marcel reported that this week the talks will start to reactivate the tax reform with the business union Confederation of Production and Commerce (CPC), small and medium-sized companies, the Central Unitaria de Trabajadores (CUT) and various professionals in the tax area, to continue next week with the political parties, both the ruling party and the opposition.

Chile has had good economic news in recent weeks.

Public spending fell more than 23% in 2022 and a surplus was achieved for the first time in a decade.

The Consumer Price Index (CPI) recorded a surprise fall of -0.1% in February, when the market expected a rise of up to 0.4%.

It is the first time since November 2020, in the midst of the covid-19 pandemic, that a drop in the cost of living has been observed.

Unemployment is in less than two digits and the price of the dollar against the Chilean peso has been controlled.

Despite the forecasts, the Chilean economy recorded growth of 0.4% in January.

Marcel, who attributes this scenario to local factors, has assured that these figures are the anticipation of a solid recovery trend.

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Source: elparis

All news articles on 2023-03-21

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