Inspenet, May 11, 2023
The Chilean government forecasts economic growth of 0.3% for the country instead of the 0.7% contraction it had previously anticipated. As indicated in the Public Finance Report for the first quarter of 2023, the Executive has adjusted its estimates upwards due to the fact that domestic demand would fall less than expected and that a recovery process is already underway.
In addition, inflation is expected to reach 7.9%, exceeding the previous forecast of 7.3%. The government has also raised its forecast for the price of copper, the South American country’s top export, to an average of $3.85 a pound this year ($8,847 a tonne), from a previous estimate of $3.74.
The Minister of Finance, Mario Marcel, has affirmed that these are slightly positive figures and that they reflect what should be the trajectory in the course of the year. “Therefore, if that level is maintained constant, if nothing grows for the rest of the year, a figure like this of growth of 0.3% for the year would already be validated,” Marcel said.
Chile’s red gold shines brightly: government raises forecast for copper price
Chile is the world’s largest producer of copper and the increase in the price of copper could have a positive impact on the country’s economy.
The Chilean government also raised its forecast for the price of copper, the South American country’s main export, to an average of $3.85 a pound this year ($8,847 a tonne), from a previous estimate of $3.74.
According to the government, the adjustment of the economy will be less intense than expected some time ago and a recovery process is already beginning.
“These are slightly positive figures. There is no radical change, but it is good to start seeing positive activity figures, which reflect what should be the course of the year,” said Finance Minister Mario Marcel, who presented the report to senators in Congress.
The projection can be supported, according to Marcel, by looking at the data that is already available for economic activity in the first quarter, with the IMACEC indices for January, February and March already “pointing to activity growth of 1% compared to the quarter immediately for total GDP and for non-mining GDP, of 1.6% compared to the immediately preceding quarter”.
“Therefore, if that level is maintained constant, if nothing grows in the rest of the year, a figure like this of growth of 0.3% for the year would already be validated.”
The Chilean economy is undergoing an adjustment process after a rapid post-pandemic recovery, which has implied strong inflationary pressure that has led the Central Bank to maintain the interest rate at 11.25% since October.
According to analysts and operators, the governing body will keep the rate at that level in this week’s monetary policy meeting and will only begin to apply cuts from the second semester.
The Chilean government’s forecast of 0.3% growth in the country’s economy is a positive indicator amid a process of economic adjustment and inflationary pressure. The upward revision of the estimates is based on a lesser drop in domestic demand and the recovery process that is beginning.
Source : https://lado.mx/noticia.php?id=13103440
Photo: ShutterStock
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