‘Copper insulated’ Chilean economy outperforming and Peso becoming too strong
The Chilean central bank raised its forecast for economic growth this year to between 4.75% and 5.25% (from 4% to 5%), adding that it expects GDP to expand 4% to 5% in 2013.
The bank expects stable interest rates in the short term and inflation of 2.5% this year and 3% in 2013, according to the quarterly monetary-policy report.
Policy makers raised their growth forecast on higher personal incomes due to low unemployment, increased access to credit for consumers and companies and investment in mining driven by the high price for Chile’s main export, copper.
But at the same time it said a global slowdown may damp exports and growth, and warned that it expected renewed periods of tension in international financial markets.
“Monetary policy faces two opposing forces,” central bank President Rodrigo Vergara told Senators in Valparaiso, according to copies of his Wednesday speech distributed to journalists in Santiago.
“On one hand, a weak external scenario that won’t add further stimulus to the economy, and on the other hand, strong domestic activity and demand with a tight labor market and little spare capacity.”
Since the central bank’s last monetary-policy report in June, Vergara has seen economic growth beat economists’ forecasts and annual inflation decelerate to a 20-month low in July.
The central bank has left its benchmark interest rate unchanged at 5% since January. Traders and investors expect the central bank to leave rates on hold for the rest of the year and lower the rate by a quarter point to 4.75% in the following six months, according to a bank survey published on Aug. 22.
Chile’s stable interest rates at a time when the central banks of Colombia and Brazil have lowered borrowing costs helped make the Chilean peso the most attractive currency in the world to invest in.
The currency’s rise and stable domestic consumer prices mean that Chile’s inflation-adjusted exchange rate reached the highest since December 2010 in July. That led to speculation the central bank would consider buying dollars to weaken the currency as it did in January 2011.
While the bank reserves the right to intervene in the currency when the real exchange rate is out of line with its fundamental drivers, “in current circumstances, it is not evident that those criteria apply,” Vergara said.
“The current real exchange rate, while low compared to a few months ago and relative to its average of the last 15 to 20 years, is within the range that fits with its fundamental drivers,” Vergara said. “An intervention has a significant financial cost for the central bank and the country”.
Copper which is the country’s main export (over half its overseas sales) and has experienced a sustained demand mainly from China in the last ten years is a permanent reference for the Chilean economy.
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Allende destroyed the Chilean economy. De nationalizing the copper industry and actively seeking foreign investment is what has worked. Comrade you have your facts completely wrong.
And the economy struggled under Pinochet for years. It was a bitter pill Chileans had to swallow for the long-term prosperity of their country. But I think most would say it was worth it now.
Think
You have been censored! Well you can’t complain, your hero Allende didn’t like freedom of speech either.
Let me remind you of something he said:
“La obligación del periodista revolucionario no es servir a la verdad, sino a la revolución”.
That’s right, no freedom of the press if the press disagrees with you. Lovely man he was.
Back to copper:
Between 1970 and 1973 copper production fell (bad). Since 1974 copper production has relentlessly increased (good).
In 1973 our known copper reserves were 50 million, they are now 350 million. How do you think that happened?
Elaine
Allende was an idealist in the same way Hitler was.
He wrote:
“Los hebreos se caracterizan por determinadas formas de delito: estafa, falsedad, calumnia y, sobre todo, la usura”.
(The Hebrews are characterized by certain types of crime: fraud, falsehood, slander and above all usury)
He also had no respect for the law or private property, he declared:
“La revolución se mantendrá dentro del derecho mientras el derecho no pretenda frenar la revolución”.
(The revolution will remain within the law while the law does not intend to stop the revolution)....he also proposed locking up the mentally ill and steralizing gypsies...luckily he only had the job for 2 years so the only “ideals” he could achieve were wrecking the economy, shutting down the press and stealing family businesses. He did manage to implement some nice ideals like dishing out food to PS members, always a vote winner.
If “idealist” is to be taken positively, the ideas should be positive, his were not. He was an anti-democratict, anti-semitic despot who shot himself when his nightmare world collapsed around him...sound familiar doesn't it.
I hope Pinochet torments him down there in hell.
I didn't read about his anti-Semitic ideas or other abhorrent ideas but leaving that aside, his ideas of taking profitable farms and businesses (from their legitimate owners) and turning them into loss-making communes, is reason enough to render his style of government as hopeless.
It reminds me of the Cultural Revolution in China where peasants were put in all the positions of power - with no clue what to do - and anyone educated or able was put to work in the fields. Utterly stupid.
All the fear, hatred and angst his name still provokes on the gluttonous, the egotistical, the greedy, the covetous, the mediocre………………..
Compañero Salvador Allende…………. Presente.
Think, I didn’t know you felt that way about him.
I clearly don’t feel the same as you about him, I don’t fear him or have any angst. I dislike him yes, but I do value the good he did. By wrecking the country he ensured his like and his type would never return to the fore in Chile.
Pinochet and Allende were two sides of the same coin. Pinochet existed because of Allende, like Allende existed because of the Oligarchic...and all the way back to 1492.
Why can’t you get out of your trench and say:
Allende........Ausente
Pinochet.....Ausente
Galtieri.......Ausente
And be happy that the recklessness and hatred of that era is gone. In 1973 we hit bottom and since then we have done much to advance, grow and move on from what happened either side of 11 September 1973. If Allende were presente this would not be the case.
Allende........Ausente
Pinochet.....Ausente
Condorito...Happy
Elaine your problem is the opposite...
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