Economic Outlook: What Is Expected for the New Year

There is no doubt that 2022 has been an atypical year in many aspects, considering that there have been political, social and economic changes that have dragged on since before the pandemic, this at the local level but also in the rest of the world. 
As for the projections for 2023 for the country, it can be noted that, according to the December Economic Expectations Survey, conducted by the Central Bank of Chile to a group of academics, advisors and executives of relevant financial institutions, the economy will regress more deeply than predicted by the latest Monetary Policy Report. While in the last issuance of this report the Central Bank projects that the GDP of our country by 2023 will have a fall of between -0.75% and -1.75%, on average -1.3%, the market consensus points rather to -1.5%, but with a third of them inclined that the recession will be -1.8% or worse. On the other hand, more than 35% believe that the decline will be -1.2% or slightly better. Chile’s domestic demand would condition GDP downwards in 2023, while consumption would fall 3.9%. According to projections, investment would vary by -4.5%. Within the latest figures, we observe that the Imacec of November marked the worst contraction of 2022 by -2.5%, this index confirmed that the economy continues to slow down compared to the previous year. 
The Minister of Finance, Mario Marcel, has insisted that the worst of the recession we are already experiencing and that by the second quarter of 2023 the economy should begin to rebound. As for inflation, the market consensus is that it would close around 12.9%, confirming its downward trend. By 2023, the consensus is for inflationary pressures to continue to fall. In the latest Survey of Financial Operators, annual inflation would stand at 4.5% over a 12-month horizon. What this projection would depend on, among other external factors, on the war in Ukraine, energy prices and, obviously, whether China manages to contain the new onslaught of Covid so that it does not affect global supply chains again. 
Chile is a country that is highly affected by the international economic concert, this has benefited us a lot in periods of bonanza, but we see what happens in lean periods, being a small country we can do nothing in the face of these external shocks, however, that does not mean that our authorities moderate these cycles as much as possible. For this reason, Minister Mario Marcel will have a transcendental role for 2023 and his good management will depend on whether we see the figures we had in previous periods again. 

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Original source in Spanish