Chile’s Economy Displays Resilience with Unexpected Growth Amid…

Chile’s economy growth slowed to 0.4% in Q4 2024, below expectations. However, full-year growth reached 2.6%, exceeding prior forecasts largely due to export increases. Economic momentum is noted despite ongoing inflation concerns, with the central bank expected to maintain current interest rates.

Chile’s economy demonstrated a slow performance in the fourth quarter of 2024, revealing a 0.4% increase from the third quarter, which fell short of the anticipated 0.5% growth according to economists’ predictions. Although the GDP growth experienced a decline from the previous quarter’s 1.5% expansion due to reduced mining activity, increased services and agricultural sectors helped mitigate the downturn.

In contrast, on an annual scale, the economy expanded by 4.0% in the fourth quarter, exceeding the projected 3.7% growth outlined in the Reuters poll. After recovering from a lackluster performance in 2023 aided by interest rate cuts, Chile’s economy saw a total annual growth of 2.6% in 2024, driven primarily by exports, alongside a domestic demand increase of 1.3%.

Amid persistent inflation, the central bank is expected to maintain the interest rates at 5.0% during its meeting on March 21, prioritizing caution despite signs of economic momentum leading into 2025. Economists note that while private consumption might bolster growth this year, considerable risks exist due to unpredictable external factors and tight financial constraints.

Chile’s government has forecasted a GDP growth of 2.5% for 2025, with inflation estimated at 4.7%, still exceeding the targeted range of 2% to 4%. This indicates the challenges faced by policymakers in maneuvering within current economic constraints, even as the domestic economy shows signs of resilience.

In summary, while Chile’s economy showed a reduction in growth during the fourth quarter of 2024, it outperformed yearly estimates with a 4.0% increase. The overall decrease in mining activities was balanced by growth in services and agriculture. The central bank is anticipated to keep interest rates steady amid persistent inflation, reflecting cautious optimism for the upcoming year, although risks from external conditions remain significant.

Original Source: money.usnews.com