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2001
marks slowest growth in decade apart from 1999 recession
In its calculation of the 2001 national accounts, the Central Bank
switched the base year from 1986 to 1996. According to the new base year
figures, gross domestic product (GDP) expanded by 2.8% in 2001. In
addition, growth rates for prior years were revised substantially, mostly
to the downside (see chart). With the exception of the recession in 1999,
2001 marks the year with the lowest economic expansion registered in the
past decade. The dismal performance sank in over the course of 2001, as
the year started with healthy growth rates above 3%, weakening to 2.7% in
the third quarter followed by a much weaker final quarter, as year-on-year
growth slowed to just 1.7%.
Weaker domestic demand key for bleak growth
The dismal 2001 performance was mainly due to the domestic side of the
economy, whereas the external sector provided for some upside momentum.
Accordingly, domestic demand dropped 0.7%, amid weak private consumption
(+1.4%) and a substantial contraction in inventories. Gross fixed
investment (GFI) also turned out weak compared to the healthy growth in
the prior year, as businesses were increasingly reluctant to invest in
machinery and equipment. GFI expanded 2.0% in 2001 but with a very
pronounced deterioration over the course of the year, starting at 8.4%
growth in the first quarter 2001 and subsequently dropping to a year-on-year
contraction of 6.2% in the final quarter. Exports expanded by 9.7% in
2001, despite a significant deterioration in the country’s terms of trade,
driven by lower copper prices - the country’s main commodity. Imports, on
the other hand, declined by 1.3%, as a robust first quarter was followed
by a constant weakening over the course of the year, culminating in a 8.9%
year-on-year contraction in the final quarter 2001.
Manufacturing industry declined amid lower external demand and reduction
of inventories
On a sectoral basis, the fishing sector led growth in 2001 with a 2.2%
expansion. Rather than the result of favourable climatic conditions, the
strong performance reflects the success of the Chilean fish farms, which
accounted for the lion share of past year’s growth. Fishing was followed
by a 7.3% expansion in electricity, gas and water output, owing to strong
growth of the hydroelectric power plants in the first half of the year
thanks to abundant rainfall. Transport and communications also expanded a
healthy 5.9%, as strong growth of mobile phones and long distance calls
compensated for a slump in aerial transports towards the end of the year
in the wake of the September terrorist attacks in the United States. On
the low end of sectoral performance was the manufacturing industry, which
experienced a 0.3% decline in 2001. Manufacturing was the only sector
which experienced a contraction last year but as the most important sector
also dragged down the overall performance of the economy. The sector
suffered from slumping external demand, in particular for capital goods
and durable consumer goods and from the reduction of inventories, which
businesses had accumulated throughout 2000.
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