Consensus Forecast Chile - May 2018.pdf - FOCUSECONOMICS Chile Available economic indicators point to a faster pace of growth in the first quarter

Consensus Forecast Chile - May 2018.pdf - FOCUSECONOMICS...

This preview shows page 1 - 2 out of 4 pages.

FOCUS ECONOMICS Chile LatinFocus Consensus Forecast | 55 May 2018 REAL SECTOR | Economic growth jumps to a multi-year high in March Economic activity surged 4.6% in March in annual terms, according to the Monthly Indicator for Economic Activity (IMACEC) published by the Central Bank of Chile. The result came in above February’s 4.0% growth, overshooting analysts’ expectations of a more modest 3.0%-4.0% increase and marking the strongest expansion in more than four and a half years. March’s print confirmed that the Chilean economy got off to a very solid start in the first quarter. The expansion was led by impressive growth in mining activity, with the mining IMACEC soaring nearly one third year-on-year in March. However, it is important to note that growth rates in the first quarter continued to be influenced by the low base of comparison caused by the shutdown of the La Escondida mine last year. Nevertheless, non-mining activity also expanded at a healthy pace in March on the back of the trade and services sectors, albeit at a much slower pace than mining activity. Available economic indicators point to a faster pace of growth in the first quarter, keeping up the strong momentum seen at the end of last year. Economic activity accelerated throughout the quarter to reach an over four-year high in March. Pointing to the underlying strength of the expansion, these recent gains were on the back of a particularly robust performance in non-mining activity. Meanwhile, a marked increase in retail sales bode well for household spending. That said, an increase in the unemployment rate in the first quarter is likely to have moderated the gains. On the external front, export growth was healthy in the first quarter and picked up pace in April. In the same month, consumer confidence rebounded, confirming the broad-based strength of the economy. Growth is expected to kick into a higher gear this year on the back of a turnaround in investment, stronger household spending and accommodative monetary policy. Furthermore, the external sector should be bolstered by healthy global demand amid rapidly rising copper production. Nevertheless, downside risks include volatility in copper prices and potentially disruptive labor disputes at key mines. FocusEconomics panelists see growth of 3.3% in 2018, which is unchanged from last month’s forecast, and 3.3% again in 2019. Inflation inched up from 1.8% in March to 1.9% in April, despite weaker wage pressures in the month. Meanwhile, at its 3 May meeting, the Central Bank left interest rates unchanged at 2.50%. Our panelists see inflation increasing towards the Bank’s 3.0% target going forward on a tighter labor market and a loose monetary stance, ending 2018 at 2.6% and 2019 at 3.0%. Outlook stable LONG-TERM TRENDS | 3-year averages Almanas Stanapedis 2014-16 2017-19 2020-22 Population (million): 18.0 18.6 19.2 GDP (USD bn): 253 308 372 GDP per capita (USD): 14,029 16,566 19,426 GDP growth (%): 1.8 2.7 3.2 Fiscal Balance (% of GDP): -2.1 -2.3 -1.6 Public Debt (% of GDP): 17.8 25.1 29.6 Inflation (%): 4.2 2.4 3.1 Current Account (% of GDP): -1.8 -1.5 -1.7 External Debt (% of GDP): 63.4 61.5 55.3 Chile Chile Economist
Image of page 1
Image of page 2

You've reached the end of your free preview.

Want to read all 4 pages?

  • Summer '18
  • Sagar Arora
  • Inflation, LatinFocus Consensus Forecast

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes