The rapid vaccination process and the price of copper, among other factors, have led several multilateral organizations, consulting firms and investment banks to improve growth projections for the Chilean economy this year.
Although 2020 was a year to forget in economic matters, Chile is heading towards a rebound, thanks to the vaccination process against Covid-19, which already has more than 7 million people vaccinated with at least one dose, and the better prospects for the price of copper. This has been confirmed by at least five international organizations, which in recent weeks have raised their outlook for Chile.
During the last week of March, the World Bank released the "Back to Growth" report, which offers a much more encouraging outlook for the region this year, increasing the projection for Chile from 4.2% to 5.5% growth. Among the reasons for this improvement is the rapid recovery of China, with the consequent rebound in commodity prices. The price of copper, Chile's main export, has remained at record levels above US$4 per pound for most of the year.
Meanwhile, this week the International Monetary Fund (IMF) improved for the third time this year its projection for Chile's GDP growth in 2021. If in October 2020 it anticipated a growth of 4.5% for 2021, since January it has already improved its outlook for the country three times. In the January update it raised it to 5.5%, in February to 6% and this week to 6.2%.
The multilateral organization's projection exceeds the 6% increase expected by the OECD for Chile.
With these new IMF estimates, our country will also be the first in Latin America to return to pre-crisis health levels, which could happen by the end of this year.
Credit Suisse also raised its growth estimate from 5.5% to 6.8%, mainly due to the rapid implementation of the vaccination process, added to other factors such as the price of copper and the monetary policy stimulus. The bank considers it a great achievement that 80% of the population will be vaccinated by the middle of the year - as anticipated by the government - and assures that the progress in this area reflects the institutional strength of the country.
According to Chilean government projections, by May 15, 9 million people are expected to have at least one dose administered, and more than 7 million will have administered both doses. Internationally, Chile's vaccination process has been highlighted as one of the fastest in the world by different media and initiatives such as Oxford University's Our world in data.
But all these projections fall short when compared to UK-based consultancy Capital Economics, which expects a 9% expansion this year, largely due to the vaccination campaign in Chile. "The government is on track to reach its target of fully vaccinating 80% of the population by the end of the second quarter, which would allow most restrictions to be lifted and the recovery to accelerate later this year," estimated Capital Economics.
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