Itaú BBA - Scenario Review - Chile
  • The first reform  

    The proposed tax reform will face a tough passage in congress

  • The recovery continues  

    Despite the favorable outlook, rising trade tensions could hamper copper prices and restrict the growth recovery.

  • Rate hikes on the horizon  

    The strong start to the year puts an upside bias to the activity outlook

  • Looking bright amid darkening global clouds  

    Investment is benefitting from improved sentiment and higher copper prices

  • Recovery consolidates  

    With a broad-based activity recovery and still-low inflation, there is no rush for rate hikes

  • Looking at global factors  

    With improved domestic conditions, the main risks to the expected recovery come from abroad.

  • Gaining momentum  

    We now expect GDP growth of 3.6% this year, with risks tilted to the upside

  • Tailwinds begin to help  

    Stronger global growth, high copper prices, recovering private sentiment and expansionary monetary policy will boost a recovery in activity

  • Turning the page  

    We have improved our growth outlook on more favorable external and domestic conditions.

  • Resuming the tightening cycle  

    Higher-than-expected inflation is putting pressure on the Central Bank

  • Neck-and-neck in the presidential race  

    Activity recovery for 2018 requires a private sentiment improvement.

  • Easing-cycle discussion still alive  

    Limited inflationary pressures mean that we cannot rule out additional rate cuts.

  • No further rate cuts  

    Recovery gains traction

  • Sluggish growth persists  

    With weak activity and low inflation, the upcoming Inflation Report would point to more easing.

  • More easing ahead  

    Weak growth and a stable currency have led to subdued inflationary pressures.

  • Waiting for a glimmer of hope  

    Weak activity will likely show some improvement through this year as the mining drag subsides.

  • Ending the easing cycle, despite economic weakness  

    Government expenditure prevented a technical recession in 1Q17, and a meaningful recovery remains elusive.

  • Clarifying the appetite for easing  

    The central bank would implement another 25bps rate cut before the end of 2Q17.

  • A cautious central bank  

    We still expect a 100-bp easing cycle, taking the policy rate to 2.5% by yearend

  • Easing cycle under the microscope  

    A treacherous year will call for more policy support.

  • No option but to cut  

    Monetary loosening would continue amid elusive growth.

  • Monetary easing about to begin  

    We expect a 100bps loosening cycle this year.

  • About to cut  

    Low growth and disinflation will lead to rate cuts beginning in January.

  • Scope for extra monetary easing  

    Rate cuts next year would come amid a faster disinflationary process.

  • Less fiscal support, more monetary stimulus  

    We now expect two 25-basis points rate cuts in 1Q16 amid faster disinflation and weak growth.

  • Officially Neutral  

    Despite weak growth, faster disinflation is needed to trigger rate cuts in 2017.

  • Nearing a neutral stance  

    A bleak outlook for growth and disinflation could lead to a looser monetary stance next year.

  • Activity continues to disappoint  

    We now expect GDP growth of 1.5% this year, below the 2.1% rate from last year.

  • No recovery yet  

    Low copper prices, less fiscal support and pessimistic private-sector sentiment are weightening on activity.

  • The debate on labor reform goes to the justice  

    Low commodity prices, less fiscal support and low confidence will continue to limit a recovery.

  • Losing Momentum  

    Weak growth, a stronger currency and falling inflation confirm our view of no rate hikes.

  • Tighter fiscal policy, looser monetary policy stance  

    Low copper prices limit the room for fiscal policy and weigh growth down.

  • Starting the year on the back foot  

    We reduced our 2016 growth forecast to 2.0%.

  • Growth to remain low for another year  

    A less-intense depreciation and a sluggish economy would help to bring inflation down.

  • Details of constitutional reform unveiled  

    The entire process will extend into the next administration, easing political tensions.

  • Rate hikes around the corner  

    Partial withdrawal of monetary stimulus amid a weaker economic recovery.

  • Latam in Depth - CHILE: Life with lower copper prices  

    The economy remained weak during 2Q15, and lower copper prices have dampened the expectations for a significant recovery

  • Lower copper prices weigh on the economy  

    We have reduced our 2016 forecast to 3.0% (from 3.2%).

  • A further deterioration in the growth-inflation trade-off  

    Amid higher-than-expected inflation and lower-than-expected growth, we continue to anticipate unchanged policy rates both this year and in 2016.

  • Expectations weigh on activity  

    We have reduced our growth forecasts to 2.5% from 2.8% for this year and to 3.4% from 3.5% in 2016.

  • Political Noise  

    President Michelle Bachelet announced that the government will start a constitutional reform process in September.

  • A more cautious Central Bank  

    As a response to the worsened inflation outlook, the Central Bank introduced a tightening bias in the first Monetary Policy Report of the year.

  • A turning point?  

    We have revised our GDP growth-rate and inflation forecasts for 2015 to 2.8% and 3.0%, respectively.

  • Reforms advance  

    the December indicators came in significantly better than expected.

  • Inflation Hits the Brakes  

    Industry continues to perform poorly.

  • Oil prices speed up the external adjustment  

    Chile’s 3Q14 GDP grew 0.8% from the previous year

  • The Easing Cycle Ends  

    Chile’s IMACEC (monthly proxy for GDP) fell 0.2% between August and September,

  • One Final Cut to Come  

    We expect a modest 0.5% year-over-year increase in August’s IMACEC (monthly proxy for GDP).

  • The Government’s Grace Period Is Over  

    Chile’s economy weakened further in 2Q14.

  • Weaker Growth, Lower Interest Rates  

    The IMACEC (monthly proxy for GDP) contracted by 0.8% from May to June

  • Monetary Policy Board Is Split on Rate-Cut Timing  

    The IMACEC (monthly proxy for GDP) increased by 0.6% from April to May

  • Consumption Following the Footsteps of Investment  

    The economy once again grew at a below-trend pace in 1Q14.

  • The Easing Cycle Will Likely Continue  

    The Chilean economy grew at a below-potential rate in 1Q14.

  • First Step in the Government Reform Program  

    Investment led the deceleration in 4Q13.

  • A Sharper Deceleration and Further Rate Cuts  

    Chile’s economic activity has continued to slow, led by investments.

  • An Easing Bias Amid Higher Volatility  

    Chile’s economy slowed substantially during the last quarter of 2013, bringing growth for the full year to 4.0%.

  • Investment-Led Slowdown  

    We maintain our GDP estimate at 4.2% for 2013, but we increased our 2014 forecast to 4.2% (from 4.0%).

  • Waiting for the Run-Off  

    Chile’s GDP was up 4.7% year over year during 3Q13, following 4.0% growth the previous quarter.

  • Easing Cycle to Continue  

    The Chilean peso has weakened, led by the earlier-than-expected start of the easing cycle.

  • Consumption Continues to Post Rapid Growth  

    We expect Chile’s GDP to grow 4.2% in 2013 and 4.4% in 2014.

  • Not So Sluggish After All  

    Chile’s economy posted weak growth in 2Q13, but the number’s breakdown shows strong final demand growth.

  • Slower Growth  

    The economy posted a below-expectation growth during the first half of the year.

  • Downside Risk for Growth  

    We maintain our growth forecasts (4.5% and 4.7% for 2013 and 2014, respectively), but downside risks for activity are increasing.

  • Slower Growth Leaves Room for Rate Cuts  

    We now expect Chile’s economy to grow by 4.5% this year and by 4.7% in 2014.


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