Chile Raises 2024 Economic Growth Forecast as Copper Prices Soar

(Bloomberg) -- Chile’s government raised its economic growth forecast for this year and forecast higher prices for its top export copper through 2028, adding to optimism the nation is recovering from a year of stagnation.

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Gross domestic product will expand 2.7% this year, up from the prior forecast of 2.5% in February, Finance Minister Mario Marcel told the Senate Tuesday. The government raised its 2024 copper forecast to $4.20 per pound from $3.84 and expects the average price to remain steady through 2028.

“There’s been an important revision, reflecting what has been happening in markets in recent months,” Marcel said, referring to copper, as he presented the quarterly Public Finances Report.

Chile’s economy is picking up on the back of stronger consumer spending and an important boost from copper. The red metal touched a two-year high this week as investors see tight mine supply, possibly creating shortfalls within months. Meanwhile, the central bank is seen extending its easing cycle at its policy meeting next week, providing relief to families and businesses.

Read more: Chile Central Bank Sees Cautious Rate Cuts Amid Global Risks

Aside from higher copper prices, the increased 2024 economic growth projection reflects stronger-than-expected activity at the start of the year, Marcel said.

Gross debt will stand at 40.6% of GDP in 2024, 41.2% in 2025 and remain relatively stable after that, according to Marcel. The government maintained its 2024 fiscal deficit projection at 1.9% of GDP.

Chile’s GDP inched up just 0.2% in 2023, a year which was marred by political uncertainty, high inflation and uneven consumption.

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