The year that just ended set a record in terms of growth, at least in the usual way we measure it, which would have reached 12%. This comes after the Central Bank published the Imacec for December 2021, which increased 10.1% y/y, making it the ninth consecutive month with double-digit growth. With this figure, activity would have increased by 13.0% y/y during Q4 2021, a figure that will still have to be confirmed by the Central Bank when it publishes the annual National Accounts (March 18).

However, it wasn't all good news. First, the figure was below market expectations (although almost in line with our estimate), unlike the upward surprises we had seen in recent months. Second, compared to November, the series declined by 0.4% in seasonally adjusted terms, after seven consecutive increases, causing the growth rate to slow to 9.1% annualized q/q (from 12.8% q/q). Thirdly, when we break down the variation, although significant advances were observed in most sectors in the year-on-year comparison, the margins were not as good: Trade fell again (-1.4% m/m SA), as did goods production (-1.8% m/m SA), which could only be partially offset by services (1.4% m/m SA). This continues to shape the economic slowdown scenario we have been seeing in recent months, which is likely to be exacerbated when we begin to see the figures for 2022, as we do not have the elements that explained the expansion in 2021.

So, what now? Our scenario envisages a first quarter that will still show some dynamism, which will basically be explained by the bases of comparison. However, once this effect has worn off, the projections are not so promising. We therefore consider a technical recession at the end of the third quarter to be quite likely, and what is more, negative variations in the Imacec toward the end of the year. Of course, this does not take into account policy changes, the implementation of new programs, and/or shifts in expectations that may arise with the installation of a new administration in the country or setbacks in the local or international epidemiological situation. 

Once the urgent issues have been addressed, we must refocus on what is important. The burden of low growth will continue to generate a sense of unease among the population, of unfulfilled promises or, worse still, of forcing their fulfillment through populist and irresponsible measures. This will leave us in a worse position than we started out in, negatively affecting those who were supposed to benefit much more. No one is saying that we should grow for the sake of growth, or that our goal should be to repeat the 12% (spoiler: it's not going to happen), as it is essential that growth be comprehensive and inclusive, with everyone feeling involved and no groups excluded simply out of revenge or ideology. The pandemic has been terrible for everyone, it is true, but it can also be seen as an opportunity to make leaps in productivity that we had not dared to make before, but which had to be made due to the urgency (hello, teleworking). This is everyone's job, not just the new government's, but also our business class and us, myself included, the citizens.

Nathan Pincheira 

Chief Economist at Fynsa