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Private consumption and GDP in Chile

The main component of aggregate demand in Chile is private consumption, which, as a percentage of GDP, represented 63.1% in the first half of 2022.

Chile is a country rich in natural resources and its economy has historically been oriented towards the export of primary products.

Public consumption was 13.8% of GDP in the first half of this year, up from 12.7% in the same period of 2021.

Another key component of demand, gross fixed capital formation, was 19.7% of GDP in the six months ended June 30, 2021, and 24.2% in the first half of 2022.

Private consumption

In the first half, Chile’s GDP expanded 6.4% compared to the same period in 2021, as a consequence of the release of the measures implemented to prevent the spread of Covid-19, as well as the high vaccination rate.

On December 19, 2021, the candidate of the leftist coalition “Apruebo Dignidad”, Gabriel Boric, won the presidential elections for the period 2022 – 2026.

President Boric has stated that he intends to make significant changes to the current political, social and economic schemes, with an emphasis on social policies, greater state intervention in the economy and less private sector participation in the health, pension and education systems, which would be financed with tax increases.

According to the Public Finance Report for the first half of 2022, the Structural Balance target for the current presidential term will be based on a medium-term gross debt sustainability analysis, moving towards a double-rule fiscal policy for Chile.

The government’s fiscal policy objective includes a structural deficit reduction target of 0.75 points of GDP per year, so starting from a structural deficit of 3.3% of GDP in 2022, the government expects to reach -2.6% in 2023, -1.8% in 2024, -1.1% in 2025 and -0.3% at the end of the presidential term.

Based on the latest estimates, central government revenues are projected to increase by P68.157 billion in 2022 (a 6.3% increase in real terms compared to central government revenues in 2021).

 

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