SANTIAGO, Oct. 16 (Xinhua) -- Chile is expecting an economic decline of up to 5.5 percent this year, an improvement on the previous forecast partly thanks to China's booming demand for Chilean exports, analysts have said.
Other factors contributing to the South American country's economic recovery include the gradual lifting of restrictions due to the COVID-19 pandemic, and the government's domestic consumption stimulus plan.
According to the International Monetary Fund (IMF), China will be the only major economy whose gross domestic product (GDP) will grow in 2020, "which favors Chile, because it is the main market for Chilean products," economist Hugo Fazio told Xinhua.
Fazio, who is also the director of the National Center for Alternative Development Studies, said that "in the world recession, there are exceptions such as China," whose contribution to the Chilean economy "is extraordinarily strong."
The IMF is predicting a 6-percent decline for the Chilean economy this year, but the organization also reported a 14.4-percent increase in the price of copper in August due to a "growing optimism about China's economic recovery, falling inventories, and supply interruptions in producing countries" such as Chile and Peru.
For Chile, "mining is very important, because the main export product is copper and mining accounts for half of total exports. There, China is the main market," Fazio said.
Between January and September this year, exports to China from the Chilean mining sector represented 77.9 percent of total shipments to the Asian country, with revenues of over 14 billion U.S. dollars, according to Chilean National Customs Service.
Chilean economist Francisco Castaneda said China's "strong appetite" for merchandise, food and raw materials such as copper has driven the value of the metal to 3 dollars per pound.
Castaneda, who is also the director of the Business School at the Universidad Mayor, a private university in Santiago, Chile, said that mining activity has expanded by 2.4 percent so far this year, as the sector never completely halted production during the health emergency.
Economist Guillermo Pattillo said that the third quarter of 2020 "is looking better than what was expected a few months ago," adding that the best way forward would be to "resume certain levels of activity," as Chile has achieved a better control of the COVID-19 pandemic.
Chile's GDP plummeted 14.1 percent in the second quarter of this year, the worst decline since the economic crisis in the 1980s.
"Without a doubt, the situation today looks significantly better than what we could have foreseen in June or May of this year, when there was no certainty about when the lockdown was going to end," said Pattillo, who is an academic at the University of Santiago.
In August, economic activity in Chile fell by 11.3 percent year-on-year, but with a growth rate of 2.8 percent compared with the previous month, according to the Central Bank of Chile.
Trade "continues to experience an important improvement" as quarantines and certain sanitary restrictions are gradually lifted and thanks to the domestic demand stimulus, which allowed citizens to withdraw up to 10 percent of their pension funds, according to the central bank.
The Chilean government is still concerned about the 1.8 million jobs that were eliminated due to the pandemic, bringing unemployment to 12.9 percent in the June-August quarter, and general uncertainty has also been compounded by social demonstrations and the constitutional plebiscite scheduled for Oct. 25.
Despite the issues facing the country, the Chilean government expects an economic recovery of around 5 percent by 2021. Enditem