Chile’s economy slowed in Q4 2024 with 0.4% growth from Q3 but grew 4.0% year-on-year, surpassing estimates. Overall, 2024 growth was 2.6%, above the central bank’s projection. Meanwhile, inflation remains a challenge, prompting caution in monetary policy.
In the fourth quarter of 2024, Chile’s economy experienced a slowdown, with a 0.4% growth compared to the previous quarter, slightly lower than the 0.5% forecasted by economists. This deceleration, down from 1.5% in the previous quarter, was largely attributed to a reduction in mining activity, though it was somewhat mitigated by increases in services and agriculture. Year-over-year, however, the economy grew by 4.0%, surpassing the anticipated 3.7%.
The Chilean economy has shown resilience, rebounding from a sluggish 2023, supported by interest rate cuts. Following a series of reductions amounting to 625 basis points since July 2023, the central bank paused its easing cycle earlier this year due to inflationary pressures. For the entire year of 2024, the economy expanded by 2.6%, primarily driven by exports, with domestic demand increasing by 1.3%. This growth was above the central bank’s December estimate of 2.3% and marked a recovery from the previous year’s 0.5% growth.
Economist Andres Abadia from Pantheon Macroeconomics noted that Chile concluded the year strongly, with resilient domestic demand hinting at the potential for faster growth in 2025, primarily due to robust private consumption. However, he cautioned that risks remain considerable due to unstable external conditions and tight financial environments, leaving policymakers with limited flexibility. Chile’s government has projected a GDP growth of 2.5% for the current year, with an average inflation rate anticipated at 4.7%, above the target range of 2% to 4%.
The article elaborates on Chile’s economic performance in the fourth quarter of 2024, highlighting a slowdown yet overall annual growth exceeding expectations. The resilience in domestic demand and exports are key drivers of this growth, though external risks and inflation concerns remain considerable. Projections for the current year indicate a cautious outlook with anticipated GDP growth of 2.5% amid continued high inflation rates.
Original Source: money.usnews.com
