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Chile: GDP growth improves in Q1
GDP reading: GDP growth gathered steam to 0.7% on a seasonally adjusted quarter on quarter basis in the first quarter, from 0.5% in the fourth quarter of last year. The Q1 reading was slightly above the estimate based on monthly economic activity data.
Broad-based expansion: Household spending growth accelerated to 1.0% seasonally-adjusted quarter-on-quarter in the first quarter, which marked the best reading since Q3 2021 (Q4 2024: +0.8% s.a. qoq). Government spending surged 8.8% (Q4 2024: -5.5% s.a. qoq). Meanwhile, fixed investment flatlined in Q1 (Q4 2024: +0.4% s.a. qoq).
On the external front, exports of goods and services growth sped up to 2.6% in Q1 (Q4 2024: +1.2% s.a. qoq). Conversely, imports of goods and services growth moderated to 1.2% in Q1 (Q4 2024: +5.6% s.a. qoq).
GDP outlook: Economic growth is set to slow somewhat later this year, partly as the Q1 jump in government spending is unlikely to prove sustainable given the conservative 2025 budget.
Panelist insight: On the outlook, Itaú Unibanco analysts said:
“Imports of capital goods remain upbeat, private sentiment has registered only a mild dent following the swings in global trade tensions, and copper prices have remained resilient, providing optimism that the investment recovery expected this year will materialize. Above-historical real wage growth and a continued external boost from Argentinian tourism has provided a solid platform for growth this year. While we expect public expenditure to adjust as the year unfolds, risks tilt toward overall expenditure in the year above the official forecast of 2.3% real growth.”
