Santiago, February 3 (Xinhua) -- Affected by the "low base effect" caused by the economic contraction in 2020 and the abundant market liquidity, Chile's economic recovery in 2021 is strong. However, many analysts pointed out that with the adjustment of fiscal and monetary policies and changes in the comparative base, Chile's economic growth rate will decline significantly this year and next year.
According to a report released by the Central Bank of Chile a few days ago, in December 2021, Chile's monthly economic activity index increased by 10.1% over the same period last year. According to the index, Chile's gross domestic product (GDP) will grow by about 12% in 2021. According to a report released by the Chilean National Bureau of Statistics on January 31, Chile's unemployment rate was 7.2% in the fourth quarter of last year, down 3.1 percentage points from the same period last year. By the end of last year, nearly 76 percent of jobs lost during the outbreak had recovered, the agency said.
In addition, according to the data previously released by the Central Bank of Chile, the country's foreign trade performance last year was eye-catching, with the total import and export volume of the whole year increasing by 41% over the previous year to 186.5 billion US dollars, of which exports were 94.7 billion US dollars and imports were 91.8 billion US dollars, an increase of 29% and 55% respectively. China remains Chile's largest trading partner. Chile's exports to China increased by 37.2% over the previous year, and imports from China increased by 67.4%. Trade with China accounted for 38.3% and 29.5% of Chile's exports and imports, respectively.
On March 29, 2021, citizens take a break at Plaza de Armas in the center of Santiago de Chile. Xinhua News Agency (Photo by Jorge Villegas)
Chilean Minister for Social Development and Family Ravierre said inclusive financial assistance such as "emergency household income" and massive COVID-19 vaccinations have boosted the economic recovery.
The pandemic caused Chile's economy to shrink by 5.8% in 2020. In order to help families and individuals cope with the living difficulties caused by the epidemic, the government has issued inclusive financial assistance such as "emergency income for families", and also allowed citizens to withdraw the balance of pension accounts in advance, releasing a large amount of liquidity to the market, stimulating consumption activities, and driving the domestic economic development.
At the same time, Chile's vaccinations are steadily advancing, helping the economy to recover. As of now, the proportion of people aged 18 years and over in Chile who have completed two doses of vaccination is close to 93%, and the proportion of people in the country who have been vaccinated with intensive injections exceeds 65%. High vaccine coverage is good for the recovery of business and services.
A child receives COVID-19 vaccine at the Providencia School in Santiago, Chile, on 27 September 2021. Xinhua News Agency (Photo by Jorge Villegas)
Looking ahead to the economic development this year and next, many observers are more cautious. With the implementation of tight monetary policy and the withdrawal of large-scale fiscal stimulus, Chile's economic growth will decline significantly in 2022 and 2023. The monetary policy report released by the Central Bank of Chile predicts that Chile's economic growth level will fall back to 1.5% to 2.5% in 2022 and between 0 and 1% in 2023.
Chile will see a change of government next month. President-elect Bolic made economic recovery one of his priorities, promising tax reform in the campaign, planning to collect taxes equivalent to 5 percent of GDP for social programs over four years. In addition, Chile is formulating a new constitution, which may bring profound changes to the development of the pillar industry mining industry and bring uncertainty to the prospects for economic development.
The Economic Uncertainty Index report recently released by the Latin American Center for Economic and Social Policy studies at the Catholic University of Chile pointed out that government changes, low growth expectations, high inflation levels and the spread of the new crown variant virus Omiljung strain are the main factors in Chile's economic growth uncertainty.