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Activity should gradually recover sequentially in the coming months.
2023/11/03 | Andrés Pérez M., Vittorio Peretti & Ignacio Martinez Labra

Monthly GDP proxy (IMACEC) was flat in annual terms in September (-0.9% YoY in August), mainly driven by strong mining growth (6.3% YoY, 1.7% in August) while non-mining contracted by 1.2% (+1.3% in August). The print was in line with our call, yet above consensus (-0.5% as per Bloomberg). Non-mining activity fell by 1.2% YoY (-1.3% in August). On a sequential basis, activity rose by 0.6% MoM SA from August, reverting the 0.6% contraction of August, with mining posting a large 2.9% increase, as has been anticipated by sectorial activity data published earlier this week. Of note, non-mining activity also rose sequentially by 0.2% MoM SA, with gains concentrated in rest of goods. The headline IMACEC rose sequentially in the quarter by 0.3% QoQ/SA, partially reverting the 0.4% drop in 2Q, suggesting the economy avoided a technical recession. Importantly, the monthly print led to an annual increase of 0.2% YoY in 3Q23, in line with the BCCh’s September IPoM forecast. 


Smaller annual contractions in non-mining activity in 3Q23. Headline activity during the quarter rose by 0.2% YoY, with mining increasing 3.7% (1.2% drop in 2Q23), while the non-mining IMACEC contracted by 0.4% (1.1% fall in 2Q). Services (excluding commerce) rose 0.4% (0.5% in 2Q23), while the commerce drag eased to -3.2% (-5.2% in 2Q). Meanwhile manufacturing contracted 0.3% (2% drop in 2Q).


Business sentiment improved for the fifth consecutive month. Think-tank ICARE’s business confidence rose by 0.54pp to 43.91 points (50 = neutral) in September. Even though confidence rose for the fifth consecutive month, rising to the highest level since May 2022, business sentiment completed 20 months in pessimistic ground, and remains below the average levels prior to the social unrest (October-2019). By sectors, the improvement in the month was led by mining, where as construction, commerce, and industry were essentially flat. Business sentiment may improve in the near term due to falling inflation and lower rates at the short end, yet tight global financial conditions and domestic economic policy uncertainty will drag on confidence.


Activity bottomed out and should gradually recover sequentially in the coming months. While the print was above market consensus, it was in line with the BCCh’s forecast, confirming the bottoming out of economic activity. We expect a GDP contraction of 0.3% this year, with a mild recovery of 1.5% for 2024. Our -0.3% growth forecast for this year implies a 0.5% annual rise in activity in the 4Q23. The BCCh will publish revised national accounts data on November 18, eventually leading to level changes in economic activity.