miércoles, 31 de mayo de 2017


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Chile’s economy has had a rough start to 2017, with copper exports taking a significant hit due to strike action, moribund business and consumer confidence and a labor market which is showing signs of weakness, with unemployment rising uninterruptedly so far this year. This comes after meager growth last year as a result of low fixed investment, particularly
in the mining and construction sectors. Although the economy cooled in Q1, the political scene is hotting up. The Christian Democratic (DC) party announced the shock news that it had decided to field its own candidate for the first round of the presidential elections later this year. The move marks an end to three decades of collaboration between the center-left in Chilean politics, and could play into the hands of already firm favorite Sebastian Piñera, head of the Chile Vamos coalition. The ex-president recently announced part of his fiscal program, promising to simplify the 2014 tax reform and reduce corporation tax if elected.
 The economy should recover somewhat this year thanks to higher copper prices and a healthier regional scenario, while looser monetary policy should also support ailing investment. However, continuing subdued consumer and business confidence mean growth will remain modest.
FocusEconomics Consensus Forecast panelists see Chile’s economy expanding 1.7% this year, down 0.1 percentage points from last month’s forecast. The panel predicts growth of 2.6% for 2018.
 Inflation was 2.7% in April, mirroring March’s figure. On 13 April the Central Bank trimmed interest rates to 2.75%. Panelists foresee yearend inflation of 3.0% in both 2017 and 2018.
REAL SECTOR | Economic activity inches up in March
Economic activity ticked up 0.2% in March on an annual basis, according to the Monthly Indicator for Economic Activity (IMACEC) published by Chile’s Central Bank. This followed the 1.3% decline recorded in February and surprised analysts, who were banking on a slight contraction. It should however be noted that March 2017 contained one more working day than the same month of the prior year, which flattered the final figure. The strike at the Escondida copper mine, the world’s largest, has weighed heavily on the economy in recent months, and the mining IMACEC registered another steep fall in March. However, on the positive side, both the trade and manufacturing
sectors expanded, and with the labor dispute now resolved copper production will ramp up over the coming months.
On a monthly basis, economic activity in March dipped 0.2% in seasonally adjusted terms, a slight improvement from February’s 0.7% drop. The overall trend in March consequently pointed downwards, with annual average growth in economic activity sliding from 1.2% in February to 1.0% in March.
The Central Bank sees GDP expanding between 1.0% and 2.0% in 2017, and between 2.25% and 3.25% in 2018. Panelists participating in the LatinFocus Consensus Forecast see the economy growing 1.7% in 2017, which is down 0.1 percentage points from last month’s forecast. For 2018, the panel expects the economy to pick up speed and expand 2.6%.
OUTLOOK | Business confidence drops again in April The business confidence index (IMCE, Indicador Mensual de Confianza Empresarial) published by ICARE and the Universidad Adolfo Ibáñez fell from 45.1 points in March to 44.1 points in April, marking the second consecutive
monthly decline. Following the drop, the indicator remains stuck below the 50-point threshold that separates pessimism from optimism, where it has been since April 2014.
April’s decline came on the back of worsening sentiment in the construction and industry sectors, which more than offset improved sentiment in the mining and commercial sectors. The construction sector remains deep in pessimistic territory as a result of subdued investment and strict mortgage requirements, while the industry sector dipped on the back of worsening general business
conditions. The commercial sector climbed back into positive territory, with firms more positive regarding the country’s economic situation, while mining companies reported a rosier outlook, likely due in part to the resolution of the labor dispute at the Escondida mine.
Panelists surveyed for this month’s LatinFocus report expect fixed investment to grow 0.4% in 2017, which is down 0.1 percentage points from last month’s estimate. In 2018, the panel expects fixed investment to increase 3.2%.
OUTLOOK | Consumer confidence rises in April The Adimark GfK consumer confidence index (IPEC, Índice de Percepción de la Economía) increased from 37.3 points in March to 40.1 points in April, marking the second consecutive monthly rise. However, the index remains entrenched below the 50-point threshold separating pessimism from optimism, where it has been since May 2014.
April’s significant uptick was driven by greater optimism regarding the current economic situation of the country, the economic situation of the country over the next twelve months, consumers’ personal economic situation and the country’s economic stability over the next five years. Consumers also became more willing to make household purchases, which bodes well for private
consumption. Panelists participating in the LatinFocus Consensus Forecast expect private
consumption to grow 2.1% in 2017, which is unchanged from last month’s forecast. For 2018, the panel sees private consumption increasing 2.6%. MONETARY SECTOR | Inflation remains low in April
Consumer prices rose 0.2% in April compared to the previous month, down slightly from March’s 0.4% and bang in line with analysts’ expectations. According to the National Statistical Institute (INE), April’s figure was underpinned by a rise in prices for food and non-alcoholic drinks and health, while the price of clothing and footwear fell month-on-month.
Inflation was 2.7% in April, mirroring March’s figure and below the Central Bank’s central target of 3.0%, although still within the 2.0%-4.0% tolerance range. After stripping out volatile categories such as oil, fresh fruit and vegetables, core consumer prices rose 0.3% in April, mirroring March’s figure,while core inflation was 2.2% in April, again identical to March’s result.
The Central Bank predicts year-end inflation of 2.9% in 2017 and 3.0% in 2018. FocusEconomics Consensus Forecast panelists expect inflation to reach 3.0% in 2017, which is unchanged from last month’s forecast. For 2018, panelists also forecast inflation of 3.0%.
MONETARY SECTOR | Central Bank cuts rates again in April At its 13 April policy meeting, the Central Bank of Chile (BCC) decided to reduce the policy rate by 25 basis points, from 3.00% to 2.75%, marking the second consecutive monthly rate cut. The move surprised markets, who had
expected the Bank to leave the rate unchanged, and marks a continuation of the easing cycle which began in January this year.
The move comes after the economy underwent a rough patch in Q1, with a prolonged strike at the Escondida copper mine reducing exports and taking a significant chunk out of economic activity in February and March. In addition, business and consumer confidence indicators remain entrenched in negative territory, while the labor market has recently shown signs of weakness, with
unemployment rising since the start of the year, which could have a knockon effect on consumption. The rate cut, combined with additional loosening earlier this year, should help prop up domestic demand and investment, which has been subdued in the last few quarters. On the price side of equation, inflation has dug itself in below the Central Bank 3.0% target, where it has
been since the back end of 2016, giving the Bank the room to soften its stance without stoking price pressures.
The Bank’s tone once more hinted at a possible further loosening of monetary conditions going forward if growth remains lackluster, although this suggestion was less concrete than in previous meetings. Indeed, the Chilean economy isset to remain weak this year, hobbled by continuing pessimistic sentiment and a mining sector which is far less dynamic than it was a few years ago, which could set the stage for a further rate trim depending on the evolution of prices.
Panelists participating in the LatinFocus Consensus Forecast see the policyrate at 2.58% at the end of 2017. Panelists expect the policy rate to end 2018 at 3.07%.
EXTERNAL SECTOR | Copper prices dip again in AprilCopper prices lost ground in April, compounding the slight fall observed in March. Copper prices averaged USD 2.58 per pound (equivalent to USD 5,682 per ton) in April, representing a 2.5% monthly decline from March’s
average price of USD 2.64 per pound. However, prices were up 16.6% yearon- year, only slightly below March’s 17.5% figure.
The drop in prices last month came as supply constraints lessened, with production resuming at Chile’s Escondida mine after lengthy strike action was halted. In addition, Freeport McMoRan reached a temporary deal with the Indonesian government allowing it to restart copper concentrate exports, although a potential strike at the sight could disrupt production.
Panelists participating in the LatinFocus Consensus Forecast expect copper prices to average USD 2.54 per pound in 2017 and USD 2.61 per pound in 2018.
INFORME DE FOCUS ECONOMICS(www.focus-economics.com)
Enviado por Focus Economics - Barcelona: España

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