Chile’s economy slowed in Q4 2024 but achieved a 4.0% growth year-over-year, exceeding expectations. Full-year growth reached 2.6%, driven by exports and internal demand, outperforming previous estimates. Despite encouraging signs, inflationary pressures and external volatility present risks for the economic outlook in 2025.
Chile’s economy experienced a slowdown in the fourth quarter of 2024, registering a growth rate of 0.4% compared to the previous quarter. Although this growth was slightly below economists’ expectations of 0.5%, it represented a notable improvement from the previous year’s performance. The slowdown was attributed to a contraction in mining activity, which was somewhat balanced by increased services and agricultural sectors.
On a year-over-year basis, Chile’s economy grew by 4.0% in the fourth quarter, surpassing forecasts of 3.7% growth. This annual performance is indicative of a rebound following a lackluster 2023, supported by interest rate cuts which the central bank paused earlier this year due to continued inflation concerns. In 2024, the overall economic expansion reached 2.6%, driven primarily by robust exports and internal demand, which grew 1.3%.
This growth exceeded the central bank’s December forecast of 2.3% and marked a significant increase from the 0.5% growth of the previous year. Analysts note that Chile ended the year on a strong note, with notable resilience in domestic demand, suggesting potential for further growth in 2025 due to increased private consumption. However, uncertainty remains due to external factors and tight financial conditions affecting policymakers’ flexibility. The government anticipates a GDP growth of 2.5% for this year, with inflation likely averaging 4.7%, above the official target range of 2% to 4%.
In summary, while Chile’s economy witnessed a slowdown in the latter part of 2024, it showed resilience with a 4.0% growth year-over-year in the fourth quarter and a full-year growth rate exceeding projections. Economic performance has been bolstered by exports and steady internal demand, although inflationary concerns persist. Looking forward, Chile faces both opportunities for further growth and challenges from volatile external conditions.
Original Source: money.usnews.com
