SANTIAGO (Reuters) – Chile’s economy slowed in the fourth quarter of 2024 from the previous three months but gained steam compared to a year earlier and full-year growth exceeded official estimates, data released by the central bank showed on Tuesday.
The figures were published ahead of a key interest rate-setting meeting on March 21 at which policymakers are widely expected to hold borrowing costs at 5.0%, as they call for caution amid sticky consumer price inflation.
The world’s largest copper producer saw gross domestic product rise 0.4% in the fourth quarter from the previous three-month period, the bank said, a touch below the 0.5% growth expected by economists in a Reuters poll.
GDP growth slowed from the previous quarter’s 1.5% expansion as mining activity shrank, but was partly offset by higher services and agricultural activity.
“More timely monthly activity data suggest that the economy headed into 2025 with more momentum. This, combined with above-target inflation, means that the central bank is likely to stand pat on Friday,” Kimberley Sperrfechter of Capital Economics said.
On an annual basis, Chile’s economy grew 4.0% in the fourth quarter, beating the Reuters poll forecast of 3.7% growth.
Chile last year regained momentum after a weak 2023 on the back of interest rate cuts. The central bank in January paused an easing cycle amid inflationary concerns after delivering a total 625 basis points of cuts since July 2023.
In 2024 as a whole, the Chilean economy expanded by 2.6%, boosted mainly by exports, with internal demand growing 1.3%.
Full-year growth stood above the 2.3% the central bank had projected in December and marked an acceleration from the previous year’s 0.5%, as well as the strongest expansion since the post-pandemic rebound in 2021.
Pantheon Macroeconomics’ chief Latin America economist Andres Abadia said that Chile ended the year on a solid footing as domestic demand showed resilience, adding that growth might accelerate this year on strong private consumption.
“But risks remain tilted to the downside, given volatile external conditions and still-tight financial constraints, with policymakers having little room for maneuver in the near term.”
Chile’s government last month forecast GDP to grow 2.5% this year, while average inflation was estimated at 4.7%, still above the official 2% to 4% target range.
(Reporting by Gabriel Araujo and Natalia Ramos Miranda; Editing by Andrew Heavens, Chizu Nomiyama and Susan Fenton)
