Chile’s economy has faced a contraction for two consecutive months, primarily due to declines in mining and commerce, impacting overall growth. The Monthly Economic Activity Indicator for April fell by 0.3%, less than the expected 0.6%, indicating a slowdown in economic activity.
Despite a 3.5% rise in activity compared to last year, challenges persist, with informal employment on the rise even as formal unemployment rates decrease. The second quarter of 2021 shows a deceleration in economic growth, despite lower interest rates and a surge in copper prices.
April saw declines in mining and commerce, although retail sales surged as predicted. While copper production fell short, Finance Minister Mario Marcel is optimistic about the positive impact of increased copper prices, anticipating stronger current account balances and higher government revenues.
Chile’s Economic Outlook
The government has raised its growth forecast to 2.7% for 2024, driven by positive trends in various sectors and recent spikes in copper prices. Analysts are also revising their projections upward, foreseeing growth in key sectors like copper, lithium, and green hydrogen.
Recent agreements, such as the deal with Codelco to boost lithium production, are crucial for Chile’s economic vitality as a leading supplier of essential materials for global industries. As Chile navigates these challenges, its decisions have far-reaching implications for international markets and supply chains.