Chile's Central Bank predicts worst GDP fall in 35 years

Chile's Central Bank revised its GDP projections for the year on Wednesday, predicting a fall of 5.5 to 7.5 percent due to the effects of the coronavirus pandemic.

It would be the largest contraction in 35 years and comes three months after the bank projected a fall of just 1.5 to 2.5 percent.

Chile reported its first coronavirus case in early March and while its initial measures to prevent the spread were mild – the vital copper industry was never shut down and quarantines were used selectively – in mid-May the government placed the capital Santiago under lockdown.

Seven million of the country's 18 million population live in the capital, which generates around half of Chile's GDP.

It is one of the worst hit countries in Latin America with close to 3,400 Covid-19 deaths and 215,000 cases.

The pandemic hit Chile while the country was reeling from widespread social unrest over inequality that broke out in October and contributed to GDP falling by 2.1 percent in the final quarter of 2019.

The bank said that "a large part of the contraction has already happened, taking into account the fall in activity in March and April." 

But it warned that the figures for May and June would be even worse given the increased lockdown measures in those months.

However, there was some good news with the Central Bank predicting the recovery would begin in the third quarter of 2020, with growth of 4.75 to 6.25 percent next year and a further 3-4 percent in 2022.

– TIMES/AFP