Chile’s economic activity experienced modest growth for the second consecutive month in November 2024, signaling a gradual recovery supported by real wage increases and the central bank’s monetary easing measures.
Source:- bbc news
**Economic Activity Index (Imacec)**
The Monthly Economic Activity Index (Imacec), which serves as a proxy for the country’s GDP, rose by 0.3% in November compared to October, surpassing analysts’ median estimate of 0.2%. On a year-over-year basis, the index increased by 2.1%, according to the Central Bank of Chile.
Source:- bbc news
**Sectoral Performance**
The industrial sector rebounded with a 2.2% increase in November, breaking a three-month streak of declines. The commerce sector also saw gains, contributing to the overall economic expansion.
**Monetary Policy and Inflation**
The Central Bank of Chile has been implementing interest rate cuts since mid-2023, reducing the benchmark rate by a total of 6.25 percentage points to the current level of 5%. These measures aim to stimulate economic activity amid persistent inflationary pressures. Annual inflation stood at 4.2% in November, with projections to reach the 3% target by early 2026.
**Labor Market**
The unemployment rate decreased to 8.2% in the three months leading up to November, indicating some improvement in the labor market. However, economists caution that job creation remains sluggish, highlighting the need for sustained economic momentum to support employment growth.
**Outlook**
The International Monetary Fund (IMF) has revised Chile’s GDP growth projections downward to 2.3% for both 2024 and 2025, citing persistent inflationary pressures and a sluggish labor market. The IMF also notes that while economic imbalances have largely been addressed, the recovery remains uneven across sectors.
In summary, Chile’s economy is exhibiting signs of modest growth, bolstered by industrial and commercial sector improvements and supportive monetary policies. Nevertheless, challenges such as inflation and labor market weaknesses persist, necessitating continued policy attention to sustain and enhance economic recovery.
Share your views in the comments
