Chile, buoyed by copper price and vaccines, sees 2021 GDP growth at 7.5%

FILE PHOTO: Containers are pictured at the San Antonio port
FILE PHOTO: Containers are pictured at the San Antonio port, in Chile August 6, 2019. REUTERS/Rodrigo Garrido/File Photo

July 12, 2021

By Fabian Cambero

SANTIAGO (Reuters) – Chile’s government on Monday revised upwards its projection for 2021 economic growth to 7.5% for 2021, from 6% previously.

Inflation will hit 3.7% in 2021, up from a previous estimate of 3.4%, the budget office said in a quarterly report. The price of copper, a critical driver of the economy, will average $4.11 per pound in 2021 compared with the previous prediction of $3.99.

For 2022, the budget office sees the economy growing 2.9%, down from an earlier estimate of 3.5%.

Domestic demand for goods and services is expected to rise by 12.6% compared with an increase of 10.7% predicted previously. The peso was seen at $712 to the dollar in 2021 from a previous projection of $699. One dollar currently equals about 743 pesos.

The buoyant forecasts come as Chile rolls out one of the world’s fastest COVID-19 vaccination campaigns, with 59% of its total population now fully vaccinated. (Graphic on global vaccinations) https://tmsnrt.rs/3tUM8ta

The campaign has been accompanied in recent weeks by a downturn in infections, prompting the government to ease restrictions.

Fears abound though about the arrival in recent weeks of the more contagious Delta variant, amid questions of how the Sinovac vaccine that Chile has primarily used will withstand it.

The economy of the world’s top copper producer has also been bolstered by record high prices of the red metal this year as its main buyer China’s economy rallied.

Presenting the latest projections, Finance Minister Rodrigo Cerda told the senate finance committee that economic activity had returned to pre-pandemic levels.

He said the current projections were founded largely in the evolution of the copper price and the government was not celebrating its emergence from the pandemic just yet.

“We understand that there are analysts and other organizations have more significant growth in mind, but we still want to be cautious,” he said. “While at present our pandemic outlook is good, there can always be further risks.”

(Reporting by Fabian Cambero, writing by Aislinn Laing; Editing by Lisa Shumaker)