Business and personal services propelled the expansion, highlighting the dynamism of communications. Mining recorded the largest negative contribution. GDP grew 0.4% in seasonally adjusted terms relative to the prior quarter.
IHS perspective | |
Significance | Chile's GDP advanced 2.2% year on year in the third quarter, following 2.5% and 1.9% growth in the first two quarters. The expansion was driven mainly by services. On the expenditure side, the main drivers were government consumption and machinery and equipment within the investment category. |
Implications | Domestic demand advanced 3.6% relative to the prior year, driven by expansions in all aggregates. Exports fell 0.9%, propelled by exports of goods. Inventories were down 0.3% of GDP. |
Outlook | GDP growth in the third quarter was slightly better than anticipated. Nevertheless, IHS still observes that the dynamics of the main indicators still lack acceleration. The outlook for 2016 does not present much of a difference under the current domestic and foreign scenario. |
Chile's central bank reports national income accounts data for the third quarter showing that GDP expanded 2.2% year on year (y/y). Seasonally-adjusted GDP advanced 0.4% relative to the prior quarter. On an expenditure basis and relative to the prior year, total consumption advanced 2.5%, highlighting the 5.9% increase in government spending. Private consumption advanced 1.8% y/y, driven by health and communications services, followed by consumption of non-durable goods. Gross fixed capital formation (up 7.1%) was propelled by investment in machinery and equipment (up 12.2%) and construction (up 4.9%). Exports of goods and services contracted 0.9%, mainly driven by lower exports of copper, metallic products, and machinery and equipment. Meanwhile, imports of goods and services advanced 3.1%, propelled by larger imports of business services. Inventories dropped by 0.3% of GDP. On the supply side, personal and business services contributed the most to the expansion of GDP. Communications stood up as the most dynamic sector in the third quarter, followed by financial services and utilities. Mining contracted by 3.0%, recording the largest negative contribution in the third quarter. Fishing and restaurants and hotels also recorded contractions.
Outlook and implications
The dynamics of the main indicators still lack acceleration. Regarding consumers, real retail sales and imports of consumer goods do not reflect a significant improvement. Consumer confidence indicators slightly improved in October, especially over the economic outlook for the short term; nonetheless, these remain pessimistic. The unemployment rate stood at 6.4% in the third quarter, from 6.5% in the prior moving quarter, while recording an increase to 7.1% in Gran Santiago – versus 6.5% in June. In the business sector, confidence has dropped significantly in the mining sector in the last month, although has overall been optimistic. Commerce, construction, and industrial sectors remain pessimistic, showing a deterioration in commerce in the last month. We do not observe a sound improvement in imports of capital goods. The outlook for 2016 does not present much of a difference under the current planning scenario, which includes the withdrawal of the fiscal and monetary stimulus domestically.