MercoPress. South Atlantic News Agency

“Turn the lights off and look for another job”

Ronald Brown, president of the Chilean Association of Exporters warned that if the exchange rate in Chile drops to 500 pesos to the US dollar then, “turn the lights off and look for another job”.

"No country can follow an exchange rate policy isolated from the rest of the economy and a general development strategy, and if the export industries are unable to grow then the rest of the country is condemned", emphasized Mr. Brown.

Actually Chile has fallen victim of its own success: in just twelve months the Chilean currency has appreciated from 720 pesos to 600 pesos last week meaning that exporters have seen their costs in US dollars balloon and their income in pesos drop dramatically.

"We want a country with equal opportunities for everybody, non discriminatory where everybody has a fair chance of development and with an exchange rate at 600 pesos to the US dollar this becomes into a serious problem".

And what happens if the US dollar drops to 500 pesos?

"Unfortunately I've heard Central Bank experts talk about it which is really is shocking, and it's not a problem as we are facing now, but rather a matter of turning the lights off and looking for another activity", indicated Mr. Brown.

Deflation in Chile

Consumer prices in Chile during November dropped -0,3% bringing the eleven months total to 1,4% and 1% in the last twelve months, according to the latest release from the Chilean Statistics Institute.

Sectors which experienced the greatest drop were Transport (-1,6%); Clothing (-0,4%); Housing equipment (-0,2%); Food (-0,2%).

Housing, Education, Leisure remained flat, while Health services increased 0,2%.

At this rate annual inflation in Chile should reach 1,3%, below the Central Bank target of 2/4%.

Wholesale prices acted similarly during November with a drop of -1,5%, bringing the wholesale index for the eleven months of 2003 to 0,2% and -1,7% in the last twelve months.

Wholesale domestic and imported prices dropped -0,8% and -3,5%.

The wholesale price index decrease in November was extensive to all sectors with a -3,3% drop in fish products leading. Consumer goods retreated -0,4%, industrial produce -0,7% and intermediate goods -1.1%. The president of Chilean exporters said that for economic development stability is needed and the "degree of variability we are facing is against any possible horizon of rational expectations".

"With the US dollar at 550 Chilean pesos, we won't be seeing investments in export industries for several years", warned Mr. Brown.