The CBCH is like a kingfisher in a speedboat
Two consecutive positive surprises in the IMACEC were swiftly followed by an upward revision of the Central Bank’s 2024 GDP growth forecast. Still, the positive result was largely attributable to a milder-than-usual seasonal decline in economic activity, rather than to genuine growth. While macroeconomic fundamentals have improved since 2023, they may not have improved sufficiently to support the required acceleration.
February's retail sales data confirm the continued sluggishness in consumption. Consumer loans and mortgages are also sluggish. The positive outlook, albeit relatively muted, is derived from February’s manufacturing production data. Nevertheless, there are no indications of a rebound in investment. Data on business confidence paints a bleak picture as well.
In the December to February rolling quarter, labor market indicators confirm that Chile is emerging from the depths of the economic cycle. Following the sustained rise in real wages throughout 2023, February 2024 saw signs of stabilization. The recovery in real wages over the last year, coupled with the modest uptick in employment, bodes well for an improvement in the real wage bill.
Following two consecutive positive surprises, March CPI came in below expectations. Despite the March CPI report, our assessment of the inflationary trend is consistent: inflation continues to hover slightly above the Central Bank's target of 3%. Sustained inflation in services, despite broad volatility, adheres to historical patterns.
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