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Mixed sentiment dynamics suggest only a moderate activity recovery ahead.
2024/01/02 | Andrés Pérez M., Vittorio Peretti & Ignacio Martinez Labra

The monthly GDP proxy (IMACEC) grew 1.2% over one year in November, the third consecutive annual increase (but above the 0.3% in each of the two previous months), consolidating the view of null GDP variation last year, or even a slightly positive print. The total IMACEC increase of 1.2% was above expectations (Bloomberg consensus: 1.0%; Itaú: 0.6%), while non-mining IMACEC posted a second consecutive 1.0% yoy print. Goods-led activity in the month, with manufacturing (6.4% yoy), mining (2.7% yoy) and the rest of goods (2.9%, mainly value added electricity generation). Services, mainly transportation (and favored by air travel base effects), increased 1.2% yoy. On the other hand, commerce contracted 1.4% yoy (-0.7% previously). On a sequential basis, total activity rose 0.3% MoM SA from October (0% previously), pulled up by the 1.3% mining increase. Excluding mining, activity rose 0.2% MoM SA, with positive contributions from services and goods. With activity dynamics continuing to surprise favorably, we also view even lower odds of a greater than 75-bp cut by the BCCh later this month.  


The economy grew 2.2% qoq/saar in the quarter ending in November. In annual terms, the economy during the rolling-quarter grew 0.6% yoy, pulled up by mining (1.8%), while core activity rose 0.4% yoy (-0.1% in 3Q and -0.8% in 2Q). At the margin, core activity rose 2.4% qoq/saar (+1.2% in 3Q and -2.3% in 2Q), lifted up gains in manufacturing (+10.7%), while services were broadly flat.   


Mixed sentiment dynamics at the end of 2023 suggest only a moderate activity recovery ahead. Think-tank ICARE’s business confidence dropped by close to 7pp to 35.7 points (50 = neutral) in December, the most downbeat print of the year. Business sentiment completed 22 months in pessimistic ground, and remains below the average levels prior to the social unrest (October-2019). By sectors, the deterioration in the month was widespread with only commerce posting an improvement. Regulatory uncertainty and increased public safety concerns were flagged as key drivers in the month’s deterioration. Recently, the Chilean Copper Commission (COCHILCO), indicated that the mining investment pipeline for the period 2023-2032 fell by 11% with respect to last year’s survey to USD65.7 billion, the lowest since 2007 (USD64.9 billion). With business sentiment downbeat and a reduced pipeline, weak private investment dynamics are likely to persist. On the other hand, falling interest rates and lower inflation are helping consumer sentiment gradually recover. By the end of 2023 consumer sentiment increased by 7.2 pp from 2022 to 30.3, still in negative ground (50 = neutral).

Better-than-expected activity throughout 2023, along with a higher growth forecast for China led us to our 0% call for 2023 (with risks tilted to the upside), while less contractionary monetary policy would support growth of 1.7% this year. For December we preliminarily expect the economy to increase by 0.5-1.5% YoY.