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Chile After zero growth in 2023, output will increase by 1.8% in 2024 and by 2.1% in 2025. Rising real wages, due to lower inflation, and falling interest rates will allow consumption to pick up in 2024. Business confidence has improved, but policy uncertainty will weigh on investment growth during early 2024. Strong demand for minerals will continue to sustain exports. Headline inflation will continue abating and will reach the central bank target in the second half of 2024, while core inflation will fall at a slower pace. The central bank is projected to continue easing monetary policy and reach a neutral stance by late 2024. Fiscal policy will be slightly expansionary, with expenditure in line with the fiscal rule and revenue from mining, including from a new mining royalty, helping to ensure moderate deficits. Government debt will remain at manageable levels. Chile should move towards a more progressive tax system that brings in more revenue for expenditure that enhances growth and reduces inequalities. The global shift toward renewable energies is an opportunity for Chile given its natural resources. Domestic demand has been weak Output grew by 0.3% in the third quarter of 2023 largely due to net exports, as domestic demand is still weak, with a fall in investment offsetting a recovery in consumption. Growth was underpinned by energy and water services, and mining. High-frequency data show retail sales growing in October. Business confidence has improved but is still below historic levels. Headline inflation has fallen steadily and stood at 5% in October, down from 14.1% in August 2022. Core inflation is also falling, and two-year inflation expectations have remained anchored at the 3% target since March.
Chile
1. Consumer price index excluding energy and food. Source: Central Bank of Chile; and INE. StatLink 2 https://stat.link/d4xm0k
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 2: PRELIMINARY VERSION © OECD 2023