Chile GDP falls more sharply than expected in Q4 amid investment slump

Alexander Bueso Sharecast | 20 Mar, 2017 14:16 | | |

trabajadores de escondida

Chile's economy fell into a funk at the end of 2016 as investment plummeted, with weakness set to spill over into 2017, although economists sounded a more positive note on the backhalf of this year.

Gross domestic product in South America's most developed economy shrank at a 0.4% quarter-on-quarter pace in the last three months of 2016.

That was twice the drop economists had forecast and followed a quarterly pace of expasion of 0.9% over the previous three months.

Year-on-year, growth slowed from 1.8% in the third quarter to 0.5% in the fourth, as expected.

Domestic demand was hardest hit, falling back at a quarterly pace of 1.0% and undoing the prior quarter's growth, as gross fixed capital formation pluned 5.6% after rising just 0.5% in the previous quarter.

A 1.7% rise in private spending on the other hand helped consumption to advance by 0.3%, amid an improving underlying trend, according to Carlos Abadia, senior international economist at Pantheon Macroeconomics, and helping to offset weaker public outlays.

The external sector performed well, growing 3.0% while imports were up 0.8%.

In real terms, GDP for 2016 was only 1.6% higher, its weakest pace since 2009.

The first quarter of 2017 would see little improvement due to the workers' strike at the Escondida mine, severe wildfires, and poor business confidence, Abadia said.

However, uncertainty ahead of the November general elections permitting, Abadia was more upbeat on the outlook for the second half, thanks to an expected improvement in both external and domestic factors.

Copper prices were also expected to be more buoyant and low inflation and interest rates should see private spending continue to perform well, he said.

More news

12:47 Mitsubishi and Nissan chairman rules out merger

Japanese carmakers Mitsubishi Motors Corp and Nissan Motor Co are not looking at plans for a merger between the two companies, according to the chairman of both firms.

11:18 UK public sector borrowing rises but deficit hits Hammond's target

The UK budget deficit met the Chancellor's much reduced target but public sector borrowing rose more than expected in March and is forecast to rise in the coming year.

10:27 JPMorgan upgrades Carillion, Kier is top pick, Interserve 'attractive'

Taking a look at the UK construction services sector, JP Morgan Cazenove upgraded Carillon to 'overweight' and said Kier Group remained its top pick for quality.

09:48 London open: Stocks flat as investors pause for breath

London stocks were little changed in early trade as investors paused for breath following strong gains in the previous session, when sentiment was underpinned by hopes that centrist Emmanuel Macron will win France's presidential elections.

09:18 WS Atkins shares keep rising after activist Elliott confirms stake

The takeover of WS Atkins by Canadian rival may not be signed sealed and delivered quite yet, as US activist hedge fund Elliott Advisors has scooped up a 6.8% stake in the London-listed engineering consultant .

08:56 Stagecoach, Virgin and SNCF team up for west coast partnership rail franchise bid

Transport operators Stagecoach and Virgin Group have teamed up with French high speed operator SNCF to bid for the UK's West Coast rail franchise.

11:49 Whitbread serves up solid profits but warns of tough consumer outlook

Whitbread served up a fairly solid set of full year results and while it reported a good start to 2017, warned of a tougher consumer environment than last year for its Premier Inn hotels and Costs coffee shops.

08:19 Tuesday newspaper round-up: Customs bill, banks, WS Atkins, business rates

Britain will have to settle a demand for €2 billion over its failure to tackle customs fraud before it can agree a post-Brexit trade deal with the EU, senior Brussels sources have said. European officials believe that HM Revenue & Customs is failing to curb Chinese crime gangs that systematically undervalue goods imported into the EU through Dover and Felixstowe, avoiding billions of pounds in customs duty and VAT. - The Times

07:49 Tuesday preview: Whitbread, BHP and public sector borrowing in focus

UK public sector debt figures follow a smattering of corporate results first thing in the morning from the likes of Whitbread, BHP Billiton and St James's Place.

24 Apr US close: Markets rally as Macron takes pole position

US equity markets were in the green on Monday over investor relief on centrist Emmanuel Macron winning the first round in the French presidential election and on hopes of possible tax reform.