Chile’s economy slowed in Q4 2024 but demonstrated stronger annual growth of 4.0%. Full-year growth reached 2.6%, exceeding projections. Challenges include inflation and external market volatility as policymakers prepare for future monetary strategies.
Chile’s economy experienced a slowdown in the fourth quarter of 2024 compared to the previous quarter, while still showing year-on-year gains. According to data released by the central bank, full-year growth surpassed initial estimates. The economic growth during the fourth quarter was 0.4%, slightly below the 0.5% anticipated by economists. The weaker performance was attributed to declining mining activity, but gains in services and agriculture helped mitigate the downturn.
Although growth decreased from the 1.5% reported in the previous quarter, annual GDP growth reached 4.0% for the fourth quarter, exceeding expectations of 3.7%. Following a challenging 2023, Chile’s economy benefited from interest rate cuts, with a total of 625 basis points reduced since July of that year. The central bank paused its easing cycle earlier this year to address inflation concerns.
For the entire year of 2024, Chile’s economy expanded by 2.6%, mainly driven by export growth and a 1.3% rise in internal demand. This figure is above the central bank’s December projection of 2.3% and signifies a notable improvement from last year’s growth of only 0.5%. According to Andres Abadia, chief Latin America economist at Pantheon Macroeconomics, strong private consumption may accelerate growth this year, although potential risks remain due to volatile external conditions.
The Chilean government has projected GDP growth of 2.5% for the current year, with average inflation anticipated at 4.7%, which continues to exceed the official target range of 2% to 4%.
In summary, while Chile’s economy experienced a slowdown in the final quarter of 2024, it achieved notable year-over-year growth that surpassed estimates. Factors contributing to this performance include resilience in domestic demand and strategic interest rate cuts. However, challenges such as inflation and external uncertainties loom ahead as the government and central bank navigate fiscal policies for sustained growth.
Original Source: money.usnews.com
