Chilean economic growth slows sequentially in Q1, likely to grow just slightly this year – Wells Fargo

The Chilean economic growth has been disappointing in the last several years. But the first quarter results feel more than a disappointment because the global economy has been recovering, albeit slowly, but the Chilean economy continues to record weak growth. The Chilean economy expanded 0.1 percent on a year-on-year basis in the first quarter of this year. This is a slowdown from the 0.5 percent rise seen in the previous quarter. However, on a sequential basis, the Chilean economy expanded 0.2 percent, as compared with a decline of 0.3 percent recorded in the prior quarter.

Real exports of goods and services and real gross fixed investment mainly led to the weak performance of the economic growth. The real exports of goods and services were impacted by the unresponsiveness of the export sector to a rebounding global economy, whereas the real gross fixed investment was affected by low sentiment in the future growth in the economy, noted Wells Fargo in a research report.

Real exports dropped 4.9 percent year-on-year, while real gross fixed investment fell 2.4 percent in the same period. Meanwhile, real imports grew in the first quarter on a year-on-year basis, rising 4.3 percent. This was the second positive year-on-year rate in the segment since the third quarter of 2013.

On the other hand, consumer demand softened further on a year-on-year basis. Personal consumption expenditures rose 2 percent in the first quarter, as compared with the 2.4 percent rise year-on-year recorded in the fourth quarter of 2016. But consumption also rebounded slightly on a sequential basis, rising 0.75 percent, as compared with the 0.52 percent rise seen in the fourth quarter of 2016.

“We expect the Chilean economy to grow somewhat this year, but not to, for now, go back to the strong growth rates characteristic of the last several decades”, added Wells Fargo.