Today, the INE published sectoral data for September, which showed a different trend from that observed in recent months. After quite some time, driven by increased liquidity measures for households, the process of lifting lockdown restrictions on the population, and the low bases of comparison represented by 2020, activity began to show the first signs of slowing down. Yes, you read that right, slowing down.

The greater dynamism observed in 2021 has been based mainly on temporary measures, which is understandable given the urgent needs arising from the pandemic and the need to assist households. This has led to unprecedented year-on-year growth rates, with GDP likely to expand by over 11% this year. However, the coming period will not have the same characteristics, and our growth will once again be explained by the country's longer-term fundamentals, which have recently faced some deterioration. If we add to this the natural uncertainty of the year-end election processes, the drafting of the new constitution, the development of the pandemic worldwide, and the process of normalizing ultra-expansionary policies around the globe, we have a rather challenging scenario. Thus, expectations for 2022 and 2023 will hopefully reach 2.0%–2.5%.

But what were those early signs? First, although manufacturing output grew by 4.3% compared to the same period last year, this result was achieved simply because it was compared to a low base, since if we compare it to August this year (using a methodology that "eliminates" seasonal components), it fell by 1.4%. Additionally, and perhaps referring to one of the sectors that has shown the greatest dynamism, retail sales also expanded significantly (19.9%) in one year, but compared to last month, using the same technique mentioned above, they fell by 0.1%, a decline that had not been seen for five months, just before the massive deconfinement processes of the population began. If we break down the above result, we see that it is the durable goods component that has slowed the most (-1.3% versus August), although non-durables have also slowed (-0.4%). Supermarket sales are an exception, expanding both annually and monthly.

This does not mean that activity as a whole will collapse. No. In fact, it is most likely that the Imacec will have shown growth of close to 14% during September and that double-digit increases in this indicator will continue for the rest of the year. However, behind these variations, there will be less and less "fundamental" momentum, and only remnants of government programs and pension fund withdrawals will remain, which, by definition, are neither infinite nor permanent. Thus, starting in the second quarter of 2022, we will begin to see rates closer to 3%, bringing us back to reality with a bang, but also focusing the discussion (we hope) on how to grow in a more sustained, responsible, and sustainable manner. And, in the absence of short-term drivers, we do not rule out the possibility of a technical recession during the third quarter of next year. But don't panic, this will not be similar to what we experienced as a result of the pandemic. In fact, it will be more of a statistical phenomenon, but it will serve as a wake-up call for us to finally incorporate into the debate how to grow more and better.

Nathan Pincheira

Chief Economist at Fynsa