Reuters/Santiago
Chile’s economic growth sped up in the last quarter of 2012 boosted by ebullient domestic demand, and clocked a robust 5.6% expansion for all of last year, the central bank said yesterday.
The economy is forecast to post strong growth again this year, stirring concern over overheating among some experts worried that local consumption and a widening current account balance of payments deficit are unsustainable.
In December, the central bank said it saw Chile’s economy expanding between 4.25% and 5.25% this year, though that forecast is expected to be upwardly revised when it releases its quarterly Monetary Policy Report (IPoM) next month.
In the fourth quarter of last year, Chile’s economy grew 1.5% from the third quarter in 2012, compared with 1.2% expansion in the third quarter from second quarter, underlining the world No.1 copper producer’s brisk growth despite fears of a slowdown.
Growth in the fourth quarter was 5.7% compared with the year-earlier quarter, versus an upwardly revised 5.8% in the third quarter compared with the year-earlier period.
GDP growth slowed negligibly from a downwardly revised 5.9% in 2011 and from an also downwardly revised 5.8% growth in 2010, positioning Chile as one of the fastest-growing countries in Latin America.
“GDP was boosted by all the economic activities with the exception of the farm and forestry sector, which posted a drop,” the central bank said in its statement.
“Business services was the area that most contributed to GDP growth, while retail, personal services, mining and construction also registered significant increases,” the bank added.
Chile’s 2012 growth is far above Latin America’s average expansion, which the UN forecast at 3.1%.
Last year, regional giants Brazil and Mexico posted 0.9% and 3.2% growth respectively, though Chile’s growth was upstaged by a 6.3% expansion in neighbor Peru.
In addition to mining copper, export-dependent Chile also produces wood products, fruits, wine and salmon.
Domestic demand continued to boost the economy in the last quarter of last year, when it jumped 8.2% year-on-year. It increased 7.1% in full-year 2012, led by consumption, whose growth was mainly fueled by home spending. Investment also contributed significantly, thanks to the strength of gross fixed capital formation, the bank added.
“We remain concerned about the extent to which growth has become dependent on the strength of domestic demand,” Capital Economics said in a note to clients. “We expect a slower pace of credit growth and a tighter fiscal stance to take some of the steam out of consumer spending and domestic demand growth this year.”