Chile's Economy Shows Sign of Recovery after Months of Stagnation

In February, Chile's consumer price index dipped 0.1 percent from January, the first monthly decline in more than two years, after the annual inflation rate reached a three-decade high of 12.8 percent in December 2022.

"It is a figure that reaffirms the downward trend of inflation ... it is data to encourage us to continue on the path we are on towards stabilizing the economy, responsible management of public finances and reducing uncertainty," said Finance Minister Mario Marcel.

The finance chief expects to end the year with inflation of between 4 and 5 percent, to reach the target range of 3 percent established by Chile's Central Bank in 2024.

To that end, the bank has aggressively increased the benchmark interest rate to tackle inflation with higher borrowing costs.

Victor Salas, an economist and professor at the University of Santiago de Chile, noted that Chilean President Gabriel Boric, who took office in March 2022, "inherited a complex economic process" during his first year in office.

"In 2022 we were in a process of stagnation or economic slowdown, and on the other hand trying to control high inflation, which was unleashed in mid-2021 in Chile," Salas told Xinhua.

The government completed its first year in office with the task of restoring balance to an economy hit by the crisis and "overheated" by state aid to the population amid the pandemic.

A drop in the price of transportation and food, including meat and fruit, has marked the start of 2023.

Chile's Finance Ministry has categorically ruled out a recession given the positive performance of economic sectors at the beginning of 2023.

Instead, the ministry foresaw a milder economic slowdown this year than the one anticipated by the central bank in its last Monetary Policy Report in December 2022.

That report estimated a drop in economic activity of 0.75-1.75 percent in 2023, before seeing growth of 2-3 percent in 2024.

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