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The Chilean economy continues to move
erratically, surprising on the upside at one moment and on the downside in
the next. On the positive side, favourable developments in employment and a
benign monetary environment provide a solid backdrop for a recovery of
domestic demand. On the other hand, the below-potential global economy
limits the upside for the Chilean economy. |
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Economy
disappoints for third consecutive month
In May, the economy expanded 2.5% compared to the same month last year,
according to the monthly indicator for economic activity (IMACEC,
Indicator Mensual de Actividad Económica). The reading came in well below
the 3.1% growth rate that Consensus Forecast panellists had expected last
month. In combination with the equally disappointing 2.7% annual growth
registered in April, the data seem to confirm that the bout of strength
observed in February and March, when the economy had expanded at an annual
4.7% and 3.6% pace has already ended. However, the data are distorted by
seasonal factors. According to seasonally adjusted data, the Chilean
economy actually expanded 0.81% over the preceding month, following on two
months of contractions.
Ambiguous signs in June: industry slumps …
More recent economic indicators from June present an ambiguous picture of
future economic developments, a situation characteristic of the past
months. Industrial production rose 2.2% in June over the same month last
year, almost half the growth rate registered in May. The industry
indicator usually exhibits very erratic movements but the slump is also
corroborated by the quarterly average, which smoothes out the volatile
monthly shifts and which dropped in June for the fourth consecutive month
to 2.3% from 5.3% in the moving quarter up to February. The June slump in
industrial output was exclusively concentrated in intermediate consumer
goods output, where growth slowed from 6.8% in May to 2.7%. Activity in
the durable consumer goods, non-durables and capital goods sectors
actually improved, most notably non-durable consumer goods, which added
2.9% over June 2002, following on almost zero growth in May.
… But
employment develops favourably
Unemployment reached 9.1% in the second quarter. While the second quarter
figure is 0.3 percentage points higher than the number for the moving
quarter up to May, the increase is entirely due to seasonal factors. In
fact, when compared with the same month last year, unemployment actually
dropped 0.4 percentage points. Moreover, the number of the employed is
growing at a more rapid pace. After having reached zero growth in August
last year, employment growth had continuously risen to a 3.9% high in May
and in June the pace of expansion remained at a strong 3.7%.
Dismal
development mars outlook
The recent data suggest that the bout of strength observed towards the end
of the first quarter was not sustained throughout the second quarter. For
June, the Consensus Forecast panellists expect the economy to advance at
an annual 2.8% pace, which would leave second quarter growth at only 2.7%,
well below the 3.5% expansion observed in the first quarter. For the
second half, some optimism about an uptick in the global economy still
remains. A more favourable global scenario would support the recovery of
the domestic economy. Therefore, the Consensus sees the economy
accelerating again, with growth reaching an average 3.6%. The forecast for
the full year was maintained at 3.3%.
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