Chilean economy slows down: GDP in the third quarter registers the lowest growth in two years
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The Chilean economy continues its path of deceleration. The Central Bank reported this Friday that GDP in the third quarter grew by 0.3%, compared to the same quarter last year. The figure is slightly higher than what was expected by the market, which placed it at 0.2%, and becomes the lowest performance since the third quarter of 2020.

The report highlights the growth of services, particularly personal services and transportation. The falls in commerce and mining, mainly, offset the above.

Domestic demand already shows negative figures by falling 1.5%, in line with lower household consumption, according to the Issuing Institute.

The Central Bank in your InfThe September Monetary Policy Report (IPoM) estimated that the Chilean economy would close in 2022 between 1.75% and 2.25%. For 2023, the Central assumed that the economy would fall into recession with a fall of between -0.5% to -1.5%.

household consumption falls

The Central Bank indicated that the 1.5% contraction in domestic demand was explained by the performance of household consumption and, to a lesser extent, investment. Private consumption fell 2.8%, reflecting lower spending on goods, particularly non-durable goods. In contrast, the consumption of services increased.

The variation in inventories, meanwhile, had a negative impact on the result of investment, which was mainly explained by lower stocks of industrial products. Meanwhile, gross fixed capital formation (GFCF) increased 2.2%, led by higher investment in machinery and equipment.

Likewise, exports increased 4.1% in the third quarter and imports fell 2.7%. In the first case, the result was mainly explained by the dynamism of exports of services, followed by shipments of goods. In the result of imports, the lower imports of technological products and crude oil stood out.

Activity agriculture-forestry fell by 2.1% due to falls in forestry and livestock. Fruit growing contracted in the period, highlighting a lower production of citrus fruits -mandarins, oranges and lemons-, as a consequence of unfavorable weather conditions. Avocado production partially offset the above, particularly those destined for foreign markets.

Agriculture registered a drop during the quarter, mainly affected by the harvest of vegetables for fresh consumption.

Activity fishing increased 1.4% driven by extractive fishing. In contrast, aquaculture declined. The performance of extractive fishing was mainly explained by an increase in landings of anchovy and horse mackerel. Meanwhile, hake catches fell, partly offsetting the above. The result of aquaculture was determined by a lower production of salmonids, highlighting the fall of Atlantic salmon.

Mining recorded a fall of 4.9%, affected mainly by the extraction of copper. This effect was partially offset by non-metallic mining. In the copper activity, there were drops in the production of the main operations in the country. This was explained by a lower ore grade, adverse weather conditions and less water availability. On the other hand, the increase in the extraction of non-metallic minerals was widespread, highlighting the increased production of lithium. Regarding the other metallic grouping, this was reduced as a result of a lower extraction of gold and silver.

The manufacturing industry decreased 3.9%, registering falls in all industrial activities with the exception of food processing and the manufacture of metal products and machinery and equipment. The lower production of wood and furniture stood out for its incidence; non-metallic minerals and basic metals; and drinks and tobacco.

The supply activity electricity, gas, water and waste management (EGA) increased 14.1%, a result determined mainly by electricity generation. The higher added value of electricity generation was explained by the use of lower cost inputs. Indeed, Hydroelectricity and non-conventional renewable energies —solar and wind— increased, replacing thermal generation, particularly based on diesel and coal. Waste management, for its part, registered a general increase, highlighting the management of mining waste and municipal and industrial waste. Electricity distribution also increased, driven by both residential and non-residential demand.

Activity construction exhibited a contraction of 1.7%, result affected by engineering works and specialized services. Meanwhile, construction increased, partially offsetting the previous result. The negative result observed in engineering works and specialized services was mainly explained by a lower construction of mining works and by a fall in the demand for repairs. Construction increased driven by housing construction, particularly apartments. Meanwhile, non-residential construction fell, largely as a result of less construction of commercial establishments.

Commercial activity fell 9.6%, in line with lower retail and wholesale sales. Retail trade registered lower sales in a large part of its activities, highlighting those carried out in large stores; specialized clothing, footwear and household equipment stores, and supermarkets. Wholesale trade decreased as a result of lower sales in all its components; machinery and equipment had a major impact; household goods; and raw materials, food, beverages and tobacco. Finally, the automotive trade also presented a drop, explained by a lower volume in vehicle sales, an effect that was partially offset by an increase in vehicle maintenance and repair services.

Transportation grew 12.2%; As in the previous period, the result of the activity reflected the lifting of sanitary restrictions compared to the previous year. All transportation activities grew, with the exception of related services. Land passenger transport was the main upward incidence, highlighting transport services in urban and interurban buses. Air transport, meanwhile, presented positive figures in all its segments, with international routes being those with the greatest dynamism and impact.

Activity communications and information services grew 7.5%, determined by information services. In contrast, communications were reduced.

The business services grew 3.7% while personal did so at 6.8%. In both cases, the result is lower than that observed in previous quarters.

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