Chile avoids technical recession in Q1

Chile’s economy grew 0.4% year-on-year in the first quarter, beating expectations.

The figure means the country has avoided a technical recession, but the risk remains this year. 

Analysts are expecting a steep plunge in activity in Q2 as the impact of quarantine measures – including a full lockdown in capital Santiago – hit home. 

Mining expanded 5.1% in January-March, offsetting a contraction of 0.1% in the non-mining sector, the central bank said.

Gross fixed capital formation rose 0.4%, driven by the construction sector.

In the last quarter of 2019, the economy contracted 2.1% amid fallout from the social unrest that erupted on October 18.

In terms of economic performance over the coming months, much depends on how the pandemic evolves, the scale of lockdown measures implemented and the impact of government support, the research unit of Santander Chile said in a report.

An uptick in demand in external markets as social distancing measures are eased could support Chile’s exports, it added.