Chile’s Economy Remains in Free Fall as Mining and Trade Contract

The country’s monthly economic activity index dropped 2.1% in March from a year earlier, with mining output down 8.5% y-o-y and trade 5.4%

A Chilean flag flying above the Palacio de La Moneda in Santiago, Chile.
May 02, 2023 | 10:44 AM

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Santiago — The contraction of Chile’s economy continues, with the monthly economic activity index (IMACEC) - a benchmark of GDP - falling 2.1% year-on-year in March, a worse-than-expected result according to the median expectations of a Bloomberg survey that forecast an annual decline of 1.7%.

According to preliminary information from Chile’s central bank, the seasonally adjusted IMACEC decreased 0.1% with respect to the previous month and recorded a 1.9% drop over 12 months, which is better than expected by the market, with the Bloomberg survey pointing to a variation of 0.4% lower.

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Poor performance of mining and trade

The annual IMACEC result was mainly explained by the fall in mining output and trade volumes, the bank said.

Mining output plummeted 8.5% year-on-year in March, while trade recorded a 5.4% drop in volume.

Mining is a fundamental piece of Chile's economy. / Photographer: Cristobal Olivares/Bloombergdfd

The decrease in the index in seasonally adjusted terms is explained by “most of its components, which was partially offset by the increase in the services sector”, the central bank said, which saw a 0.9% increase in March compared to February.

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Better forecasts

The central bank stated that the non-mining IMACEC decreased by 1% over 12 months, while, in seasonally adjusted terms, it grew 0.2% with respect to the previous month.

Several organizations have improved their forecasts for the Chilean economy for 2023, however, including the International Monetary Fund (IMF), which estimates a contraction of 1.5% for this year.


For their part, monetary policy makers expect to keep their benchmark interest rate at its highest level in two decades until a decline in inflation close to the 3% target is evident.

According to the mid-April survey of financial traders, the central bank could start cutting borrowing costs as early as July.

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