Itaú BBA - Turned upside down

Scenario Review - Chile

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Turned upside down

Novembro 7, 2019

Amid an uncertain domestic scenario, growth risks are tilted to the downside


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

• A modest subway price hike unleashed a wave of protests representing widespread social discontent. President Piñera’s new social agenda and cabinet reshuffle only partially diffused the situation, as political capital across established political parties is low.

• We expect the protests and the government’s response to lead to lower inflation both this year and in 2020 (2.6% versus 3.0% previously expected). We also see a milder activity recovery in 2020 relative to our previous expectation (to 2.4% versus 2.9% previously), from the 2.0% now expected for 2019 (2.2% previously). Meanwhile, we now see the easing cycle extending to 1.25% (1.5% previously), with risks tilted to even lower rates if the reconstruction efforts underwhelm and inflationary pressures stay contained.
 

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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