Economic momentum seemingly held up in the second quarter, following an exceptionally strong first quarter, in which the economy expanded at a near five-year high. Economic activity remained elevated in May, after soaring to the highest rate in five years in April. Business confidence remained upbeat throughout Q2, pointing to sustained expansionary conditions and the improving health of the manufacturing industry. Consumer sentiment was also fixed in positive territory in the same period, against the backdrop of a broadly stable inflationary environment and labor market. In turn, retail sales rebounded in May, potentially signaling more solid household spending in the quarter. On the external front, export growth decelerated again in May, but remained generally strong. In a move to capitalize on buoyant copper demand, the government announced on 29 June a USD 1 billion capitalization into the state-owned mining company Codelco, which should ensure sustained production levels going forward. • Solid global demand for copper should help GDP expand at a fiveyear high in 2018. Meanwhile, domestic demand will benefit from an accommodative monetary environment and improving labor market conditions, which will spur economic activity. FocusEconomics panelists see growth of 3.6% in 2018, which is up 0.1 percentage points from last month’s forecast, and 3.3% in 2019. • Inflation rose from 2.0% in May to 2.5% in June marking a 13-month high. FocusEconomics panelists see inflation gradually increasing towards the Central Bank’s 3.0% target in the coming quarters on a tighter labor market and buoyant consumer demand. They see inflation ending 2018 at 2.8% and 2019 at 3.0%. • At its monetary policy meeting ending on 13 June, the Central Bank voted to hold the policy rate stable at 2.50% for the eleventh consecutive meeting, owing to below-target inflation. The Bank is likely to sit tight in the short-term, as inflation is seen as subdued until the end of the year. Our panelists expect the rate to end 2018 at 2.74% and 2019 at 3.59%. • The Chilean peso trended downward in recent weeks, following a strong depreciation at the end of May on the strength of the U.S. dollar, in line with most other emerging market currencies in the region. On 6 July, the CLP traded at 657 per USD, a weakening of 4.6% month-on-month. FocusEconomics panelists expect the peso to end 2018 at 619 CLP per USD, and 2019 at 615 CLP per USD.
REAL SECTOR | Economic activity remains elevated in May Economic activity rose 4.9% year-on-year in May, according to the Monthly Indicator for Economic Activity (IMACEC) published by the Central Bank of Chile. The result came in below the previous month’s multi-year high of 5.9%, but comfortably overshot analysts’ expectations of a more modest 3.0%–4.0% rise. Despite falling short of the April’s high, the print in May marked the second most robust expansion in economic activity in nearly five years and confirmed that growth momentum carried over into May. The expansion was driven by robust non-mining activity, with the non-mining index up 6.9% in annual terms in May (April: +6.2% year-on-year) on buoyant trade and services activity. Meanwhile, mining IMACEC growth remained broadly stable from the previous month, increasing 4.7% in May (April: +4.6% yoy). In seasonally-adjusted terms, economic activity swung from a 0.4% contraction in April to 0.7% growth in May. The Central Bank sees GDP expanding between 3.3% and 4.0% in 2018, and between 3.3% and 4.3% in 2019. FocusEconomics panelists see growth of 3.6% in 2018, which is up 0.1 percentage points from last month’s forecast, and 3.3% in 2019. OUTLOOK | Consumer confidence rises in June The Adimark GfK consumer confidence index (IPEC, Índice de Percepción de la Economía) came in at 52.7 points in June, up from 51.2 in May and marking the strongest reading so far this year. As a result, the index moved further above the critical 50-point threshold separating optimism from pessimism among Chilean consumers. Sustained consumer optimism came against the backdrop of solid GDP growth in the first quarter and robust economic activity readings in April and May. The improvement in consumer sentiment in June was driven by consumers’ more positive view of their current personal situation, with the sub-indicator surging to the 50-point mark in June, up considerably from the previous month’s reading. Sentiment regarding the country’s current economic situation and the country’s stability in the next five years also improved significantly in June. Lastly, consumers’ outlook regarding economic expectations over the next twelve months and consumers’ willingness to buy big-ticket household items both remained broadly stable in June, and well-entrenched in the positive territory. As a result, four out of the five components of the index settled in positive territory in June. Panelists participating in the LatinFocus Consensus Forecast expect private consumption to grow 3.5% in 2018, which is up 0.2 percentage points from last month’s forecast, and 3.5% again in 2019. OUTLOOK | Business confidence edges down in June The business confidence index (IMCE, Indicador Mensual de Confianza Empresarial) published by ICARE and the Universidad Adolfo Ibáñez edged down from May’s 55.9 points to 55.1 in June. As a result, the index remained firmly above the crucial 50-point threshold that separates optimism from pessimism among businesses, having been in positive territory since the beginning of the year.
Leading the overall slowdown was sentiment in the construction industry, which fell for the third consecutive month in June, hitting a year-to-date low of 43.1. Sentiment was weighed down by weak demand conditions, which offset strong construction activity levels and more optimistic future expectations in the industry. Meanwhile, sentiment in both the mining and the commercial sectors remained roughly in line with the previous month’s levels. Confidence in the mining sector eased from May’s three-year high of 66.5 points (June: 65.4 points) amid easing demand and slightly less optimistic expectations of future output. Confidence in the commercial sector was 58.9, still elevated but nevertheless a fresh year-to-date low. The industrial sector was the only one to see a strengthening from the previous month in June: Sentiment rose marginally to 53.2 in the month, driven by improving confidence about future output and more favorable outlook for prices. Consequently, three out of four sectors were in positive territory in June. Panelists surveyed for this month’s LatinFocus report expected fixed investment to expand 5.2% in 2018, which is 0.3 percentage points up from the previous month’s forecast, and 4.6% in 2019. MONETARY SECTOR | Inflation picks up pace in June Consumer prices rose 0.1% in June, edging down from the previous month’s reading (May: +0.3% month-on-month) and coming in marginally below market expectations of a more moderate 0.2% increase. According to the National Statistical Institute (INE), the increase was driven by higher prices for transport, housing and utilities, and food and beverages. Inflation rose for a third consecutive month in June, coming in at 2.5% (May 2.0%) and marking a 13-month high. As a result, inflation moved closer to the mid-point of the Central Bank’s 2.0%–4.0% tolerance range. In addition, average inflation over the last 12 months ticked up from 1.9% in May to 2.0% in June. After removing volatile categories such as fruit, vegetables and fuel, core consumer prices remained flat in June, down from the previous month’s 0.2% increase. Meanwhile, core inflation stood at 1.9%, up from May’s 1.7% print. The Central Bank predicts year-end inflation of 2.8% in 2018 and 3.0% in 2019. FocusEconomics Consensus Forecast panelists expect inflation to end 2018 at 2.8%, which is up 0.1 percentage points from last month’s forecast. The panelists see inflation ending 2019 at 3.0%. MONETARY SECTOR | Central Bank leaves policy rate unchanged in June At its monetary policy meeting ending on 13 June, the board of the Central Bank of Chile (BCC) unanimously voted to hold the policy rate stable at 2.50% for the eleventh consecutive meeting, in line with market expectations. In turn, the monetary policy environment in Chile remains among the most accommodative in Latin America. The Bank’s decision came on the back of subdued headline inflation, which came in at 2.0% in May (April: 1.9%), just reaching the lower bound of the Central Bank’s 2.0%–4.0% target, after falling below the lower bound in March and April. Meanwhile, core inflation remained stable at 1.7% for the fourth consecutive month in May. According to the policy statement, due to higher oil prices and the depreciation of the peso, short- to medium-term inflation expectations increased somewhat in recent months, reaching 3.0% for both the one- and two-year horizon. Nevertheless, expectations remain wellanchored around the middle of the Bank’s target range. In its communiqué, the Bank stated that the current monetary policy stance should be maintained in the short term, and the stimulus measures will be gradually pulled back as macroeconomic conditions drive inflation towards 3.0%. Moreover, the Bank sees slightly increased upside risks to the inflation forecast as oil prices—especially as measured in pesos, given the ongoing depreciation against the dollar in recent months—continue to increase, and a strong economic recovery seems well underway. Nevertheless, the BCC is likely to stay put in the short term given the current climate, before gradually increasing rates as inflationary pressures intensify. The majority of our panelists expect the rate to remain at 2.50% throughout the third quarter, and they forecast a rate hike in the last quarter of the year. LatinFocus Consensus Forecast panelists expect the rate to end 2018 at 2.74% and 2019 at 3.59%. EXTERNAL SECTOR | Copper prices hit a four-year high at the start of June, before dropping substantially Copper prices surged to an over four-year high on 8 June, but have trended firmly downward since, dropping to multi-month lows at the end of the month amid a stronger U.S. dollar and intensifying trade war concerns. Prices averaged USD 3.16 per pound (equivalent to USD 6,956 per ton) in June, up from the previous month’s USD 3.10 per pound (equivalent to USD 6,825 per ton). Despite plummeting in the second half of the month, copper prices in June were still 21.8% higher than in the same month last year. Prices peaked at the beginning of June, boosted by a weak dollar and fears that Chile’s Escondida copper mine, the world’s largest, would be crippled by industrial action. Nevertheless, concerns of labor-related supply disruptions in key producing regions moderated through June. Coupled with fears of a fullscale trade war between the U.S. and its trading partners, this exerted strong downward pressure on copper prices. Longer-term supply fears were further quelled in late June by the Chilean government’s announcement of a USD 1 billion capitalization into state-owned mining firm Codelco. Escalating trade tensions between the U.S. and China have weighed on global commodity prices, and copper has been particularly sensitive due to its reliance on the Chinese market, the world’s leading copper consumer. Growth momentum in the Chinese manufacturing industry began to show signs of cooling in June, even before the implementation of U.S. tariffs at the beginning of July. Prices dipped further at the beginning of July, dropping to a nearly eight-month low in the first week of the month. Our panelists expect copper prices to average USD 3.13 per pound in both 2018 and 2019.
Fuente: Por Focus Economics https://www.focus-economics.com/ desde Barcelona -España