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COUNTRY INSIGHTS

If Not For You, Winter Would Have No Spring (Bob Dylan)
CHILE · Report · 20 Oct 2016

With the Monthly Index of Economic Activity rising above market expectations in August, the Minister of Finance treated the report as an opportunity to boost market sentiment. But we should be cautious in talking about re-acceleration. The Monthly Index of Business Confidence also fell back to ea...

The Economy is Numb
CHILE · Report · 16 Sep 2016

In its latest Monetary Policy Report, the Central Bank confirmed its neutral stance on monetary policy. The Central Bank also reaffirmed that the main channel of transmission of monetary policy is the exchange rate. Apparently, the Board believes that at 670 the peso is slightly overvalued. Bank ...

One More Reform. But is There Time?
CHILE · Report · 17 Aug 2016

President Bachelet's pension reform proposals both fit and break a pattern. As with previous reforms, the government appears to be bending to longstanding popular discontent, this time with the existing individual pension accounts and their administrators, known by their Spanish acronym as "AFPs"...

Industrial production, retail sales and labor market
CHILE · Report · 02 Aug 2016

The June figures released by the National Institute of Statistics are coherent with an economy that continued in hibernation. Beyond the usual volatility, base effects and the effects of inflation fluctuations on the real numbers, these indicators are flat so far this year.

Brexit: Tremor but no earthquake
CHILE · Report · 14 Jul 2016

It is not evident what the economic cost of Brexit will be for Chile. At the macro level, Chile is not significantly exposed to the UK. What is relevant for Chile is the indirect effect through the impact on its trade partners and the price of copper. What was widely unexpected was the strong app...

Ministry of Finance updates forecasts
CHILE · In Brief · 12 Jul 2016

The Minister of Finance, Rodrigo Valdes, cut from 2% to 1.75% the growth forecast for this year, in line with market expectations. The budget this year was built with an expected GDP growth of 2.75%. The ministry also cut its forecast for the growth rate of domestic demand from 1.9% to 1.4%, and ...

Monthly Index of Ecopnomic Activity (IMACEC), May 2016
CHILE · In Brief · 06 Jul 2016

In May, the 12-month variation of the IMACEC was 1.8%. This year, May had 3 trading days more than last year, with an incidence of +0.5%. Our reading of the IMACEC is negative. While the 12-month variation increased from the previous month (0.7% in April), the (rolling) quarterly variation of the...

Minutes of the June 2016 Monetary Policy Meeting of the Central Bank of Chile
CHILE · In Brief · 05 Jul 2016

The Minutes reaffirms our perception that the Central Bank is increasingly opening the door to a potential cut of the TPM in the (not so near) future. Only tow Board Members showed certain hawkish bias.In addition, the diagnosis of the economy has become increasingly pessimistic.At the internatio...

Unemployment and Sectorial Data
CHILE · In Brief · 03 Jul 2016

Labor MarketIn the March-May rolling quarter, labor market continued to show signs of deterioration. Unemployment reached 6.8%, its highest level for this rolling quarter since 2011. The 12-month growth of employment went from 1.5% in April to 1.3% in May. In the last year, about 102,000 jobs wer...

June Monetary Policy Meeting
CHILE · In Brief · 20 Jun 2016

As widely expected, in its June Monetary Policy Meeting, the Central Bank of Chile kept the Monetary Policy Rate (MPR) unchanged at 3.5%. The communiqué corroborates that the Central Bank is in a wait-and-see stance. Nevertheless, the tone has become more and more dovish. No doubt that the Brexit...

When a surprise is no surprise: Bachelet’s mini cabinet-shuffle
CHILE · In Brief · 09 Jun 2016

Michelle Bachelet replaced her Interior Minister on Wednesday. Traditionally, the Interior Minister is considered the cabinet’s first among equals, and indeed becomes acting president – referred to as vice-president – when the president is travelling (the rest of the time Chile has no such positi...

May inflation released: sag is increasingly evident
CHILE · In Brief · 09 Jun 2016

Inflation data for the month of May were released Wednesday. The monthly change was 0.2%, above the 0.3% expected by market analysts. The surprise was greater for the CPI excluding food and energy (IPCSAE): -0.1% versus an expected 0.2%. The 12-month variation of CPI was 4.2%, the same as last mo...

Cold but not freezing
CHILE · Report · 08 Jun 2016

The economy is growing at low rates, with neither signs of a recovery nor of an additional slowdown. In April retail sales came out looking relatively good, while other sectorial indicators pointed in the opposite direction. Business confidence suffered a considerable decline, while international...

Hibernation: A state of inactivity and metabolic depression
CHILE · Report · 06 May 2016

Data concerning sectorial activity reveal an economy that continues to grow at very low rates. Nominal retail sales growth went down. The index, beyond the fluctuation in February, has been flat during the year. Decomposing the index, it becomes evident that even though sales of non-durable good...

Scandal, they're going to turn our lives into a freak show
CHILE · Forecast · 08 Apr 2016

Economics: Growth has trended downwards throughout the year. The situation regarding domestic demand is even less auspicious than that of total GDP. Moreover, last year, exports (measured in real terms) experienced their first yearly contraction since 2009. The devaluation of the peso has not aff...

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