MercoPress. South Atlantic News Agency

Blame it on VAT.

An overall favourable reaction to Chile's economic prospects, both of the country and individually, was recorded in the latest opinion poll released by the Business Department of the University of Chile.

The poll "Economic Expectations and Purchasing Intentions", during the third quarter of 2003 indicated that 51,6% of those interviewed believe that the economic situation of Chile is "good", and 67,7% that their individual situation is "positive". As to prospects, 45,1% believe that the overall economic situation of Chile is set to improve but only 25,5% estimate that their individual situation will improve in the coming months.

These results refer to the A,B,C, and D groups since the high income feel they are already enjoying a very good situation and those with least income consider things will not change.

However, even when the overall perception of Chile's economy and individual prospects are positive "this does not mean an automatic impact in consumption" since home purchasing intention dropped 8,6% and similarly with cars that dropped 10,4%.

"The image of the current administration has eroded because of the increase in Valued Added Tax that became effective this year", reads the report.

A majority of those interviewed believes VAT increase will have a negative impact for Chile's economic situation, 53,9% while 53,1% feel it will also affect them individually.

This perception is even higher in the lower income groups which are most affected by unemployment.