MercoPress. South Atlantic News Agency

Chilean recovery forecasted

The Chilean economy should begin to recover and could record a 4,8% growth during the second half of 2001, according to Hernán Büchi, an outstanding Chilean economist and former Finance Minister

"Unless something catastrophic happens in Argentina, the coming months should see a considerable improvement in the economy, although not necessarily in job demand", said Mr. Büchi. The former minister recalled that 18 months ago the US economy seemed invincible, but even so Chile had its own problems and was not completely capable of taking advantage of that situation, "however in the coming months I believe world conditions will improve and a prudent management of our resources will help Chile start moving at a faster rate than the current 2,4%". But Mr. Büchi said that there's nothing to ensure "that 100 or 200,000 new jobs will be created as the government forecasts, since the economy will eventually average 3,8% in 2001 and not 4%". Chile is experiencing its highest unemployment rates since recovering civilian rule in 1990. Regarding Argentina, Mr. Büchi said that he believed the country will survive its current woes, "in spite of some mistakes they committed in the past and the misfortune of having their currency fixed par to the US dollar, which is now too strong". "The Argentine banking system is proving very solid, they are surviving 500% annual interest rates, but the public sector needs adjustments and frugality, as has happened with their private sector", indicated Mr. Büchi. Further on Mr. Büchi said that if Argentina reasonably normalizes in the coming weeks, pressure on the dollar in Chile should ease and additional demand drop. However Mr. Büchi pointed out that in an opposite scenario, a 700 plus pesos to the dollar in Chile is a great risk. "But what's important is that is spite of the Argentine crisis, and the local pressure on the dollar, Chile has maintained, and at reasonable levels, its access to international credit markets", emphasized Mr. Büchi.