IMF Survey: Chile: Strong Recovery After Devastating Earthquake

IMF Survey: Chile: Strong Recovery After Devastating Earthquake

Seven months after February’s devastating earthquake, Chile’s economy is expected to recover strongly in 2010–11, driven by reconstruction spending and a rebuilding of inventories.

The IMF, in its regular annual assessment, noted that Chile’s economy has shown remarkable resilience in the past two years. The economic recovery is fully under way, helped by appropriate policy responses to the two large adverse shocks—the earthquake and last year’s recession.

In early 2010 the Chilean economy was poised for a strong recovery. But on February 27, 2010 the country suffered a massive earthquake. Reconstruction costs were estimated to be close to US$30 billion. Yet, the economy rebounded in the second quarter of 2010 after a short contraction (see Chart 1).