Chile lowers its growth forecast for 2023 to 0%

Bloomberg— The Chilean government lowered its GDP growth forecast for this year to 0%.This came a day after a major economic indicator showed increasing chances of recession.

The government reduced its estimates by 0.2%. It maintained its forecast of growth of 2.5% next yearAccording to what was stated in the public finance report issued on Tuesday. Public debt is expected to rise to 41.2% of GDP in 2024, from 38.1% in 2023.

Chile has been hit this year by rising interest rates, weak confidence and increased uncertainty in its main trading partners, such as China. Chile’s central bank on Monday released its August Imacec report, a rough estimate of gross domestic product, which showed a surprising decline in economic activity. Finance Minister Mario Marcelo said the economy was strengthening after a series of shocks.

The monetary authorities reduced the interest rate by a total of 175 basis points in their last two meetings, to 9.5%, with inflation approaching the target.

previously, The central bank had revised its GDP forecast for 2023 to between -0.5% and 0%, compared to the previous range of -0.50% and 0.25%.. The entity said that the economy will grow between 1.25% and 2.25% next year.

Analysts polled by Bloomberg estimate that the Chilean economy will shrink by 0.2% this year, the worst performance in South America after Argentina.

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