MercoPress. South Atlantic News Agency

Chile to post record GDP of 112 billion US dollars

Chile is forecasted to post a record GDP equivalent to 112 billion US dollars given the current rate of expansion and business growth expectations for November and December.

Economists' estimates vary from 5% to 6% for the two last months of 2005 with an annual accumulated rate growth of 5,8/6%.

However the Dean of the School of Economics from the University of Chile Joseph Ramos points out that Chile's GDP has become extremely "sensitive" to the exchange rate, given the appreciation of the Chilean currency against the US dollar, which means that if last year it reached 100 billion US dollars with a limited production expansion, "this year the physical GDP growth can be estimated in 5,8%, which plus the stronger peso will give us a GDP of 115 billion US dollars".

Chief economist from Banchile, Raphael Bergoeing argues that if an average exchange rate of 560 pesos to the US dollar is considered, with a similar expansion in the third and fourth quarters, by the end of 2005 "the GDP will total 110 billion US dollars, equivalent to 6.800 US dollars per capita".

Santander Investment economist Pablo Correa forecasts that strong domestic demand will keep the growth rate in the fourth quarter at 6%, adding that "I don't believe the holidays recess in certain basic sectors like mining an fisheries, will pull the index down".

Cristina Gardeweg from Celfin, anticipates a GDP of 112 billion US dollars because there has been a "strong boost in domestic demand, consumption and investment helped by a favourable international environment".

But some of the economists interviewed consider that although domestic demand and the job market will remain strong in 2006, "a slight decline" in investment can be expected, mainly because of the strength of the Chilean currency which revalued over 10% this year against the US dollar.