Chile's Central Bank Adjusts 2024 GDP Growth Forecast Amid Economic Shifts

Chile's central bank has slightly revised its 2024 GDP growth forecast to a range of 2.25% to 2.75%. The revision reflects reduced economic dynamism due to deteriorating private consumption and rising inflation pressures, influenced by electricity costs and global maritime freight rates. The interest rate was also cut to 5.5%.

Chile's central bank on Wednesday slightly lowered its gross domestic product (GDP) growth estimate for 2024, now forecasting an expansion between 2.25% and 2.75% this year. This adjustment reflects a downturn in economic dynamism, previously projected to grow between 2.25% and 3.0%.

The central bank attributed the revision to a deterioration in private consumption and the impact of temporary factors that had boosted early-year activity. Additionally, the monetary authority raised its annual headline inflation forecast for 2024 to 4.5%, up from 4.2% in June, citing rising electricity costs and increased global maritime freight rates.

Aiming for a 3% inflation target, the bank still expects a quicker disinflation process due to lower demand pressures. The central bank also maintained its 2025 GDP growth forecast of 1.5% to 2.5%, while predicting 2025 annual inflation at 3.6%. On Tuesday, the bank unanimously voted to lower its benchmark interest rate by 25 basis points to 5.5%, aligning with market expectations.

(With inputs from agencies.)