Chile and Peru, best performing economies of the region leave rates unchanged
Chile and Peru opted this week against following the lead set by nations from Brazil to South Korea in cutting interest rates as economic growth and slowing inflation in the Pacific neighbors gave central bankers little reason to change monetary policy
Policy makers in Chile kept borrowing costs at 5% for the sixth straight month and their counterparts in Peru held their overnight rate at 4.25% for a 14th consecutive meeting.
The two economies will be among the world’s fastest growing in 2012 while also posting some of Latin America’s lowest inflation rates, according to International Monetary Fund forecasts.
Chile and Peru have shown few signs of contagion from Europe, as GDP will expand 4.3% and 5.5% respectively this year and surpass the 3.7% average growth rate for the region, the IMF said in its latest forecasts. The global economy will expand 3.5%.
Inflation will average 3.8% in Chile and 3.3% in Peru, compared with 6.4% for Latin America, the IMF said.
Consumer prices in Chile eased to a 16-month low of 2.7% in June from a year earlier, compared to the nine-month low of 4% posted in Peru. Chile’s central bank targets annual inflation of 2% to 4%, while Peru’s bank targets 1% to 3%.
Brazil’s economy, which is Latin America’s largest, will fall short of the global and regional average in posting 3% growth in 2012, according to the IMF. Brazilian industrial output fell in May for a third month and retail sales fell by the most in more than three years.
Policy makers in Brazil on July 11 led by President Alexandre Tombini lowered benchmark borrowing costs by 50 basis points to a record 8% to revive economic growth.
The Bank of Korea also on July 11 unexpectedly cut borrowing costs for the first time in more than three years, joining an international push for monetary stimulus as Europe’s debt crisis threatens to undermine global growth.
GDP in Chile, the world’s largest copper producer, expanded 5.6% in the first quarter from last year, which Peru outpaced with a 6% expansion in the same period, the fastest growth among Latin America’s seven biggest economies.
Growth in Brazil, the world’s second-biggest emerging market after China, decelerated to 0.8% in the same period, the slowest rate among Latin America’s seven biggest economies.
But with more than half of their export revenue coming from commodities, Chile and Peru also are vulnerable to a deterioration of the euro region’s sovereign-debt crisis and China’s economic deceleration.
Chile in May posted its first trade deficit in nine months on a decline in exports while the government this month cut forecasts for 2012 economic growth and copper prices.
“Domestically, output and demand indicators, despite decelerating less than expected, are evolving at trend rates,” Chile’s central bank said in a statement accompanying Thursday’s decision.
Chile’s peso has gained 5.2% against the dollar in 2012, after Colombia’s Peso while Peru’s Sol is up 2.5%.
Peru had a 34 million trade gap in April, its first deficit in three years, which widened to 106 million in May. Year-on-year growth in Peru slowed to 4.4% in April.
“Some current and advanced indicators of activity show economic growth has stabilized around its long-term sustainable level of growth, although indicators linked to the external market show weak performance,” Peru’s central bank said in a statement accompanying Thursday’s decision.
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And slowly they will start to borrow, borrow, borrow... until one they FT says “what was wrong in Peru?” and S&P downgrade some notches credit rating and here we are again with debt crisis, privatisation, unemployment, etc. and Chicago boys come to the rescue.
Seems what is good for “International Monetary Fund” is not for the inhabitants of those countries.
Anyone have ever seen this movie before?
You wrong as always this is another bank scam...
Nobody with a minimum of rational analytic skill can deny it.
Dany doesn't posess a minimum of rational analytical skill, or for that matter any skill at all!!!!
Sure boys but Perú, Colombia and Chile are bubbles created by bankers and speculators that while last take advantage of the trend created by them selves. Like in Ireland, Island, Greece, Spain, Italy, etc.
Let’s wait to the next Latam debt and financial crisis that will explode in those countries.
Until 2007/8 Ireland was the tiger of the west the example to be copy and now what?
I guess you (the analytical boys) will be glad to explain to a idiot like me why a country like Ireland that was promoted as an example of success had ended in so bad.
Waiting...
These countries (eventhough developped) do had quite contrary fiscal policies to Peru and Chile. In their issues, they are rather comparable with CFK's fiscal “model” of “spending others money like there would be no tomorrow” and inflate their buerocratic apparatus (how do you call that in Argentina... wasn't it “ñoqis”?)
The European countries you mentioned are at the brink of bankruptcy, BECAUSE they have commited fiscal atrocities and overendebtment, in opposite to Chile and Peru, who almost have non existing public debts, or even better like in the case of Chile, is an international net TRUSTOR. Do you even know what a Trustor-state is?
I bet you can't even imagine that in your farthest dreams...
Also Colombia, Peru and Chile are no bubbles, because based on the balance of trade you can see there IS SOMETHING productive about these countries. How come a small country like Chile, a third of what the “industrial” Argentina is, can export even more than it's big neighbour.
The mentioned example Greece on the other hand is quite comparable with the Argentina of 2001. Both countries have/had a destroyed productive apparatus, their trade balance had/have huge deficits. Greece was exporting 20 billion USD and importing 60 billion USD, and “sustained” all this on state debts.
I wonder how you cannot see this...
“I wonder how you cannot see this...”
The only one that I can see that cannot see is you at the moment...
I don’t know where you live but I guess that you have no idea of the EU bureaucracy (Euro ñoquis) especially in Italy, France, Spain, etc.
Chile:
GDP $248.4 billion
External debt: $99billions (40% of GDP)
Exports: $86 billion
Imports: $73 billion
Trade balance: $13 bn (surplus).
Current account balance: -$1.1 billion (deficit) is going out more $$ than what is coming in...
“How come a small country like Chile, a third of what the “industrial” Argentina is, can export even more than it's big neighbour.”???
No much more just only 1.7bn dollars ARG exports 84.3bn last year.
And because Chile premium export is cooper (first producer in the world) that represents half of total Chilean exports around USD 43bn.
And is a state owned company.
And thanks to Salvador Allende and del Campo who nationalised the sector
Such funny irony he!?
The best exported and premium product and most valuable item of the Chile’s economy comes from a company created by a socialist from nationalisation (Anaconda & others).
That produced isolation, international boycott and economy retaliation from international community leaded by fellows bankers like Rockefeller and Rothschilds families. Who wanted to have the monopoly of the cooper in the world.
What do you think about Codelco to be privatised again to private investors? Ha ha
Why liberal Pinochet didn’t make the company private again???
So MandRoad please stop trying to lecture others about economy by giving lame examples that you don’t have any idea of it.
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