Chile’s economy rebounded impressively in July 2024, showing a 4.2% increase from the previous month and surpassing expectations.
This significant turnaround, revealed by the latest data from the IMACEC (Monthly Economic Activity Indicator), highlights a strong recovery following a challenging June.
The IMACEC index, which aggregates the activity of various economic sectors to forecast GDP trends, shows both progress and ongoing challenges across Chile’s economic landscape.
Chile’s IMACEC index rises year-on-year
In July, Chile’s IMACEC index rose by 4.2% year-on-year, outpacing the expected 2.7% growth and recovering from a modest 0.2% increase in June.
This robust performance was partly due to an extra working day in July, which often boosts productivity.
The manufacturing sector played a crucial role in this rebound, with production increasing by 3.4% in July compared to 2% in June.
Notably, manufacturing output surged by 7.8%, a stark recovery from a 1.7% decline in June, demonstrating the sector’s resilience.
However, the mining sector, a cornerstone of Chile’s economy, grew at a more moderate rate of 3.6%, down from an impressive 6% in June.
Other sectors saw marginal increases, with production rising by 0.9%, down from 1.9% the previous month.
This indicates uneven growth across industries, with some still facing challenges.
Services and trade sectors show revival
The services sector experienced a notable revival, growing by 5.3% year-on-year in July, reversing a 1.8% decline in June.
This recovery is crucial for Chile’s overall economic health, as the services sector significantly contributes to employment and economic diversity.
Additionally, the trade sector expanded by 4.9%, slightly slower than the 5.8% increase observed in June.
This softer trade growth suggests potential instability in consumer demand, which will require close monitoring.
On a seasonally adjusted monthly basis, Chile’s economic activity rose by 1% in July, following a revised 0.4% increase in June.
This upward trend reflects growing confidence in the economy.
In contrast, June’s data presented a more challenging picture for Chile.
The IMACEC index showed a minimal 0.1% increase year-on-year, a sharp slowdown from the 1.1% growth in May and falling short of the 1.7% increase anticipated by the market.
This marked the smallest expansion in the current six-month growth cycle, raising concerns about the sustainability of recent gains.
Despite a strong performance in mining, particularly in lithium extraction with a 5.9% increase, the services sector’s 1.8% decline and the trade sector’s slower growth of 4.3% dampened overall results.
Monthly data also indicated that seasonally adjusted economic activity increased by a modest 0.4% in June.
The contrasting figures for June and July underscore the volatility of Chile’s economic landscape.
The 4.1% gain from June to July highlights the potential for recovery and the importance of maintaining economic momentum.
July’s strong performance suggests a positive shift, while June’s challenges point to underlying issues that need to be addressed.
These dynamics emphasize the need for adaptive economic policies to sustain growth and support vulnerable sectors amid evolving global conditions.
Monitoring these trends will be crucial for understanding Chile’s economic trajectory and ensuring resilience in a constantly changing environment.
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