The Chilean economy is expanding much lower than its reduced trend rate of below 3% from more than 4% a few years back. But the strong labor market does not reflect the economy’s state, noted Societe Generale. The Chilean government’s counter-cyclical fiscal spending is expected to be maintaining resource utilization at a high level, according to Societe Generale. In the mean time, any significant rebound in the economic growth from current levels seems to be unlikely due to the tough external environment.
Chile’s jobless rate is expected to be unchanged in March at 5.9% after the recent labor market trends, said Societe Generale. Labor force is expected to have grown 1.6% y/y, while employment is likely to have risen 1.8% y/y last month. Statistical discrepancies because of limited available data make it tough to draw labor market inferences.
The number of job vacancies has reduced by half in t he past two-three years, while wage growth has decelerated. However, the jobless rate has continued to remain unchanged. Chile’s labor market is expected to soften from the present levels in the medium term, added Societe Generale.
