MercoPress. South Atlantic News Agency

Chile’s economy gradually approaching recession

Chile’s economy is forecasted to expand 0.2% in 2009 according to the latest Central Bank Expectations Survey compiled during March. This is a significant drop from the previous survey in February when the forecast was 1.2%.

Economic growth expectations for 2010 also decreased from 3.55% to 3% in the latest survey and regarding the Monthly Economic Activity Index (IMACEC) for February, the forecast was a negative 1.1%.

The expectations survey which consults local economists and market analysts added that Chile’s GDP will drop 1% during the first quarter of this year.

In coincidence with the negative forecasts the basic interest rate is expected to drop to 2.5% in the next two months, although by next December should have climbed back to 3.75%.

The basic rate currently stands since February 12 at 4.75%.

Consumer inflation this year is expected to reach 2.3% while the Chilean peso/US dollar rate will remain in the range of 610 pesos to the greenback but will gradually increase reaching 630 pesos by December 2009.

Meanwhile the Central Bank also released trade figures for February which showed surplus plummeting 74% to 338 million US dollars compared to the same month a year ago.

Exports totalled 3.3 billion US dollars, down 42.2% from February 2008 and imports fell 32.5% to 2.95 billion US dollars.

Chile is the world’s leading exporter of copper, which after having reached record prices of 4 US dollars the pound in 2008, has since collapsed to 1.50 US dollars.