The year that just ended set a record in terms of growth—at least as we typically measure it—which is estimated to have reached 12%. This follows the Central Bank’s release of the Imacec for December 2021, which rose 10.1% year-over-year, marking the ninth consecutive month of double-digit growth. Based on this figure, economic activity is estimated to have increased by 13.0% year-over-year during Q4 2021, although this data must still 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 came in below market expectations (though nearly in line with our estimate), in contrast to the upside surprises we had seen in recent months. Second, compared to November, the series declined by 0.4% on a seasonally adjusted basis, following seven consecutive increases, causing the growth rate to slow to 9.1% q/q annualized (from 12.8% q/q). Third, when we break down the change, although significant gains were observed in most sectors on a year-over-year basis, the results were not as strong on a month-over-month basis: Trade fell again (-1.4% m/m SA), as did goods production (-1.8% m/m SA), a decline that was only partially offset by services (1.4% m/m SA). This continues to shape the scenario of economic slowdown we have been seeing in recent months, which will likely worsen as we begin to see the figures for 2022, given the absence of the factors that drove the expansion in 2021.

So, what now? Our scenario anticipates a first quarter that will still show some momentum, which will be largely due to the basis of comparison. However, once this effect wears off, the projections are not as promising. We therefore consider a technical recession at the end of the third quarter to be quite likely, and, furthermore, negative changes 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 resulting from the inauguration of a new administration in the country or setbacks in the local or international epidemiological situation. 

Once we’ve addressed the urgent issues, we must refocus on what’s important. The burden of low growth will continue to create a sense of unease among the public—a feeling that promises aren’t being kept or, worse yet, that their fulfillment is being forced through populist and irresponsible measures. This will leave us in a worse position than we started in, negatively affecting those it was supposed to benefit even more. No one is saying we should grow just for the sake of growth, or that our goal should be to repeat the 12% rate (spoiler: that’s not going to happen), since it’s crucial that growth be comprehensive and inclusive—one in which everyone feels included and that doesn’t exclude groups simply out of a desire for revenge or ideological reasons. The pandemic has been terrible for everyone, it’s true, but it can also be seen as an opportunity to make leaps in productivity that we hadn’t dared to take before, but which we had to make due to the urgency of the situation (hello, remote work). This is a task for all of us—not just the new government, but also our business community and us, myself included, the citizens.

Nathan Pincheira 

Chief Economist at Fynsa