Chile's economy to grow faster than expected in 2021, finance minister says

SANTIAGO, Sept 27 (Reuters) – The Chilean economy is expected to fare better than expected in 2021, fast recouping lost ground thanks in part to the success of the nation’s vaccination drive against the coronavirus, Finance Minister Rodrigo Cerda said on Monday.

Cerda said he expects gross domestic product (GDP) to grow by 9.5% in 2021, up from a previous forecast of 7.5%.

“The improved adaptation of the economy, the gradual reopening, the greater confidence of consumers and businessmen, and in particular, a greater fiscal impulse, lead us to revise the growth estimate,” said Cerda.

The new estimate, however, is still below a central bank estimate of 10.5% to 11.5% growth.

By any measure, Chile’s economy has roared back in recent months, buoyed by a fast-paced vaccination campaign and a raft of stimulus measures from the government.

Cerda said the campaign had allowed most Chileans to return to normal life, further boosting economic expectations.

Growth, however, will slow markedly in 2022, Cerda said, to just 2.5%, down from a previous prediction of 2.9%.

Cerda, who presented part of the government’s Public Finance Report to Congress on Monday, said domestic demand would grow just 1.7% in 2022, down from a previous estimate and markedly below a spike of 16.2% this year, he said.

Consumer prices are expected to increase 4.1% in 2021, just above the Central Bank’s target range, Cerda said, while 2022 inflation is forecast at 4.4%.

The Chilean government is budgeting for an average copper price in 2022 of $4 per pound, according to the report.

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