OECD raises growth estimates for the Chilean economy this year

OECD raises growth estimates for the Chilean economy this year

The Chilean Economy It said on Friday it would grow 1.9 percent this year but slow “sharply” next year when it shrinks 0.5 percent in the context of high inflation, high interest rates and a decline in investment. Organization for Economic Cooperation and Development in a report.

In June, the Organization for Economic Co-operation and Development (OECD) forecast that the economy of the world’s largest copper producer will grow 1.4% this year and decline 0.1% thereafter.

“Quarterly contractions in GDP are likely to continue into the fourth quarter of 2022 as higher inflation and higher interest rates reduce household purchasing power,” the report released on Friday said.

The agency expects inflation to close at 11.1% this year and reach 6.4% in 2023, still above the central bank’s 2-4% tolerance range. Rising inflation prompted him to raise the interest rate significantly, currently at 10.75%.

Inflation will return to its target level in early 2024, the agency said, noting that it “has risen to a 30-year high, driven by expansionary fiscal policy and exacerbated by global supply constraints and the war in Ukraine.”

The report added that after the strong expansion last year, private consumption will grow only 2.1% this year and will decrease by 1.9% next year, while investment will decrease by 2.4% this year and shrink by 1.8% in 2023.

The OECD report also notes that, in the coming years, Chile will have to address “major structural challenges to growth” such as rapid population aging, stagnation or even low productivity.

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