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Santander Expect -0.1% GDP In 2023, Internal Demand Remains Weak

CHILE
  • Santander confirm their vision of a stagnant economy that will close 2023 with a slight contraction, around -0.1% (previous estimate: -0.5%). Despite a recovery in the consumption margin, it remains below the levels of the previous year and without prospects for a significant short-term improvement, amid the weakness of the labour market. Added to this, investment is weakening and the latest registry from the Capital Goods Corporation shows that the investment plans have not yet clearly improved.
  • As expected, the GDP data reflects a practically stagnant economy, with limited progress in Q3 (0.3% seasonally adjusted q/q) and internal demand that fell for the seventh consecutive quarter. The annual GDP expansion was somewhat greater than anticipated by Imacec (0.6% y/y) as a result of additional information and upward corrections from previous quarters, mainly associated with mining and personal services.
  • From a spending perspective, the decline in domestic demand is associated with a drop in investment. On the one hand, gross fixed capital formation shows a decrease in its two components, to which is added the lower variation in inventories. Meanwhile, although total consumption continues with y/y declines (-2.2%), it shows an expansion in the margin.
  • The external sector persists with its rapid improvement in the current account deficit, which reaches -3.5% of GDP in the moving year (-4.7% in the second quarter and -6.8% in the first quarter), product of the improvement in the trade balance due to the sharp drop in imports of goods (-18% y/y) and services (-14.5% y/y) associated with the weakness of demand, while the export of services expands during the year (9% y/y).
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