Chiles economy has contracted for two straight months due to declines in mining and commerce, dampening early-year growth.Aprils Monthly Economic Activity Indicator (Imacec), a proxy for GDP, fell by 0.3%.
This drop was less severe than the forecasted 0.6%, signaling a slowdown.Interestingly, compared to last April, activity has risen by 3.5%.
Yet, challenges persist.
Unemployment decreased to 8.5%, but informal employment is increasing.The beginning of 2021 witnessed robust economic growth, the highest pre-pandemic.
Now, this years second quarter shows a deceleration.Despite lower interest rates and surging copper prices, the economy struggles.
Inconsistencies in mining and widespread informal jobs reveal deeper issues.Chiles Economic Slump: A Second Hit in a Row.
(Photo Internet reproduction)April specifically saw a 2.4% decline in mining and a 1.4% drop in commerce.
Conversely, retail sales in April surged, aligning with expectations.Regrettably, copper production fell short, but Finance Minister Mario Marcel noted the copper price boost will gradually benefit the economy with immediate positive effects.These improvements include a stronger current account and higher government revenue.Chiles Economic Slump: A Second Hit in a RowThe government recently increased its 2024 growth forecast from 2.5% to 2.7%, fueled by optimism.This optimism is based on solid performances across sectors and a recent spike in copper prices.Economic analysts have raised their forecasts to 2.5% from an earlier 1.7%.
Looking forward, Chile anticipates growth in copper, lithium, and green hydrogen sectors.Last Friday was pivotal; state-owned Codelco signed a deal to increase lithium production in the Atacama from less than 200,000 to 300,000 metric tons annually.Why is this significant? Chiles economic vitality is essential both locally and globally, particularly as a top supplier of copper and lithium.These materials are crucial for products ranging from electronics to electric vehicles, influencing global industries.As Chile addresses these hurdles, its decisions impact international markets and supply chains, underscoring its global economic role.