Despite record exports in 2022, hard times ahead for the Chilean economy

Chile managed a positive foreign trade year in 2022, with exports reaching almost US$ 100 billion, the highest in historic terms, and a surplus of US$ 2,85 billion. The Central bank stats points out that the US$ 97,5bn exports, a 3% expansion over the previous year was achieved despite a strong drop in the value of the country’s main export copper, 14%, and an 18% contraction of overseas sales of the red metal.

Overall copper exports totaled US$ 43,88bn equivalent to 43% of Chile’s exports. However the weak metal exports were more than compensated by the good performance of industrial exports, US$ 35,2bn, 19,8% higher than in 2021.

Import numbers were also significant, totaling US$ 94,6bn in 2022, up 12.4% from 2021 with a good performance in most sectors.

However December confirmed the slower pace of foreign trade, reflecting the fact that world’s leading economies could be facing recession, China, European Union and the US. Overseas sales dropped 1%, for the fifth month running, while imports contracted 17,7% compared to November, the lowest since 2022.

This week the Chilean central bank also published economic expectations for 2023, which anticipates a deceleration of inflation and a slight contraction of interest rates, beginning sometime April/May.

According to the survey among market operators, the Consumer Prices Index during January is expected to drop to a monthly 0,5%, and 0,4% in February, with an estimate for the twelve months of 2023 of 5%. However the Monetary Policy Rate from the Central Bank will slide to a twelve month 11,25% by the end of January, and 10,75% by the end of April, and 10,25% in the first half, which could mean the rate could be down to 7% by the end of 2023, and 5,5% in the eighteen months period.

As to the Chilean economy performance following on the November contraction of 2,5% the third month running, by December should be 2,7% down. This means that overall the Chilean economy is anticipated to contract 1,5% in 2023 in line with IMF, World Bank and Eclac expectations, becoming the only country in Latin America and the Caribbean together with Haiti to lose steam, with a recovery in 2024, possibly in the range of 2,4% growth. Foreign Direct investment is also anticipated to drop in the coming 18 months.

Source: MercoPress

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