Chile’s economy stagnates in the most optimistic scenario for 2023, says Senbank

SANTIAGO, Sept 6 (Reuters) – Chile’s central bank on Wednesday cut the top end of its estimate for the country’s economic performance in 2023, now predicting that gross domestic product (GDP) will show no growth in the most optimistic scenario.

The monetary authority expected the economy to expand by 0.25% this year. It maintained the lower end of its GDP forecast at a 0.5% contraction.

The central bank said the South American country’s economy should recover by next year, with GDP growth expected between 1.25% and 2.25%.

Chile’s central bank has struggled to control inflation, cutting its key interest rate by 75 basis points to 9.5% on Tuesday as price pressures eased faster than expected.

The central bank expects cuts to continue, ending the year on Wednesday with a key interest rate between 7.75% and 8%.

Annual inflation in Chile fell to 6.5% in July and is expected to fall to 4.3% by the end of the year, the bank said.

The central bank said it would ease to a target of 3% in the second half of 2024, taking into account the slowdown in recent months, the depreciation of the peso and higher fuel prices internationally.

However, the Monetary Authority warned that „the external environment remains marked by high uncertainty”.

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