Chile's economy grows at 1.6 percent in 2016, weakest since 2009 recession

The Chilean economy posted a growth of just 1.6 percent during 2016, the weakest economic performance since the recession of 2009 when the economy dropped 1.0 percent. Real exports of goods and services and gross fixed capital formation were seen as the major drag on economic activity during 2016.

Meanwhile, personal consumption expenditures (PCE) remained relatively strong in 2016, increasing 2.4 percent compared to 2015. PCE increased 2.4 percent during Q4 2016, year over year. However, government expenditures, which contributed considerably during the first three quarters of the year, slowed down considerably during the last quarter.

Real exports of goods and services fell 2.0 percent year-over-year during the last quarter of 2016 and by 0.1 percent for the year as a whole. Meanwhile, real gross fixed capital formation slumped 5.0 percent year-over-year during Q4 2016 and by 0.8 percent during the year as a whole.

"Our biggest concern for the Chilean economy remains the weak performance by the domestic economy. The Chilean economy will remain weak, if the investment sector is not able to reverse its performance during the next several quarters," notes Wells Fargo Securities in a report to clients.