- GDP expanded 2% in the first quarter from the year earlier
- Rising unemployment a sign that growth pick up may not last
Chile’s economy grew more than analysts had forecast in the first quarter as investment picked up after declining for much of the previous two years and exports of goods and services rose at the fastest pace since 2013.
Gross domestic product grew 2 percent from the year earlier, the central bank reported, compared with this 1.8 percent median estimate of 17 economists surveyed by Bloomberg. Expansion accelerated from 1.3 percent in the previous three months. Quarter on quarter growth was also 1.3 percent, the fastest pace since the third quarter of 2013.
The central bank left its key interest rate unchanged at 3.5 percent yesterday, highlighting stronger-than-expected growth, while also stressing that business sentiment remains weak and that the labor market has deteriorated. With investment coming off a very low base and unemployment rising, growth is unlikely to continue gaining pace, said Banchile economist Nathan Pincheira.
“I don’t see any indicator that allows us to think we will see similar or higher growth in the future,” Pincheira said by phone from Santiago. “Any growth on investment is against really low figures in the past quarters.”
Investment rose 1.2 percent in the first quarter from the year earlier, while government spending climbed 5.4 percent. Exports gained 2.4 percent over the same period, while imports dipped 3 percent.
Consumer spending, which gained 1.6 percent in the first quarter, is likely to remain subdued. The unemployment rate rose to 6.3 percent during the first three months of the year from 5.9 percent in the month-earlier period, more than analysts had forecast, the statistics agency reported earlier this month. A separate survey by Universidad de Chile found unemployment in the Santiago Metropolitan Region was at a six-year high of 9.4 percent in March.
“Consumer spending has been falling for the last year, reflecting growing weakness in the labor market,” Pincheira said. “There’s nothing to be too excited about.”