Itaú BBA - Outlook for the economy still weak

Scenario Review - Chile

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Outlook for the economy still weak

Julho 11, 2019

Momentum gains are unlikely to persist as private sentiment slumps, the labor market weakens and the global slowdown consolidates.

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

• Recent growth momentum gains are unlikely to persist as private sentiment slumps, the labor market weakens and the global slowdown consolidates. We still see growth of 2.4% this year (4% in 2018) and 2.9% next year. 

• Despite signaling stable rates ahead, we believe a prolonged period of trade-related global uncertainty would likely result in a sharper growth slowdown in Chile’s open economy, widening the output gap beyond that considered in the central bank’s baseline scenario. Hence, we see the board cutting the policy rate further (to 2% before the end of this year) to ensure inflation converges to the 3% target in the relevant two-year forecast horizon.
 

João Pedro Bumachar
Vittorio Peretti
Miguel Ricaurte

 

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



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