Itaú BBA - A delicate start to 2021

Scenario Review - Chile

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A delicate start to 2021

January 14, 2021

A swift vaccination rollout could compensate a weaker start to 2021.

For the version with all charts and tables, please open the attached pdf file

• 
Last year ended with the second payout of pension withdrawals, sustaining activity. Meanwhile, surging terms of trade and the beginning of the vaccination process are factors favoring the sustainability of a recovery.

• High copper prices and lower external savings (from public and private sector) have benefitted the Chilean peso. Ahead of a potentially turbulent political scenario in 2021 and acknowledging the expiration of the flexible credit line with the IMF in 2022, the central bank took the opportunity to announce a USD 12 billion reserve accumulation program, starting in January.

• In the short term, tighter mobility restrictions during the onset of the second COVID-19 wave mean activity could slow down before regaining pace after the first quarter of the year. We still see GDP bouncing back, with growth of 6% this year.

• Controlled inflation (we expect 3% by the end of this year) favors an extensive period of significant monetary stimulus (we see rates stable, at 0.5% during 2021), in order to aid the recovery.

Joao Pedro Resende
Miguel Ricaurte
Vittorio Peretti 

For the version with all charts and tables, please open the attached pdf file



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