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Activity excluding mining is still falling sharply on a quarter-over-quarter basis.

Andrés Pérez M., Vittorio Peretti & Ignacio Martinez Labra


The Chilean economy is weakening, following a strong post-pandemic recovery, but data for January came in mixed. At the start of 2023, manufacturing surprised to the upside posting a second consecutive sequential gain. Manufacturing increased 1.7% MoM/SA in January, building on the 2.3% rise in December, and leading to a 1.6% YoY fall (-4.4% in December), milder than the Bloomberg market consensus of a 3.6% drop and our 4.5% call. Meanwhile, mining fell 0.8% MoM/SA, partially reverting the 3% rise in December, resulting in a 2.9% YoY increase (+1.9% in December), the largest annual pull since April 2021. Overall industrial production (grouping manufacturing, mining and utilities) rose 0.5% YoY (-1.2% in December), the first positive print since May. On the other hand, retails sales (including vehicles) registered a 0.2% MoM/SA decline, leading to a 10.4% drop over twelve months (11.1% fall in December), somewhat larger than the market expectation of -10.2% and our -9% call. Overall, activity data points to a mild sequential drop and a 0.1% YoY increase (-1.0% in December) for the January monthly GDP proxy (IMACEC; to be released tomorrow).

Still, during the quarter ended in January, retail and manufacturing continued to contract sharply on a year-over-year basis. Durable retail goods sales fell 9.6% YoY (-10.1% in 4Q22), while non-durable goods sales fell 13.1% (-13.6% in 4Q22). Total retail sales fell 12.3% YoY (12.8% down in 4Q). Meanwhile, industrial production fell 2.0% YoY in the quarter, compared to -3.5% in 4Q, as the manufacturing drag eased (-4.7% YoY versus -7.1% in 4Q), while the mining contribution to annual growth remained near null.

​​Activity excluding mining is still falling sharply on a quarter-over-quarter basis. Manufacturing dropped 5.0% qoq/saar (from -11.7% in 4Q), while retail sales contracted 12.8% qoq/saar (-10.4% in 4Q). Total industrial production rose 2.1% qoq/saar (+3.1% in 4Q), boosted by a rebound of mining within the quarter.

We expect the Chilean economy to contract by 0.9% this year, after the estimated 2.7% increase last year. The effects of a tight domestic macro policy mix, still high inflation, and downbeat private sentiment should contribute to the ongoing activity adjustment.

Andrés Pérez M.

Vittorio Peretti

Ignacio Martinez Labra