MONETARY POLICY REPORT
BEFORE THE OF THE
PRESENTATION FINANCE COMMISSION
OF THE
HONORABLE SENATE REPUBLIC
Mario Marcel
Governor
Central Bank of Chile
1 April 2019
I. Introduction
Mister President of the Senate's Finance Commission, Senator Ricardo Lagos-Weber, Senators members of
this Commission, ladies, gentlemen,
I am grateful for your invitation to present the vision of the Board of the Central Bank of Chile on recent
macroeconomic developments, their prospects and the implications for monetary policy. This vision is
contained in detail in the Monetary Policy Report (IPoM) of March 2019, released this morning. These
antecedents provide the background for the decision adopted by the Board at the Monetary Policy Meeting
last Friday.
At that Meeting, we decided unanimously to keep the Monetary Policy Rate (MPR) at 3%. At the same time,
we noted that, in line with the lower level of inflation and its outlook, it would be necessary to maintain the
monetary stimulus for a longer period, taking a break in the process of MPR normalization that began last
October. To the extent that the economy continues on the foreseen path, this process should be resumed in
the medium term to ensure the convergence of inflation within the policy horizon.
This decision is coherent with the analysis and baseline projection scenario that I will share with you now. In
particular, it considers that the economy posted healthy growth in 2018, driven by investment, an impulse
that is expected to continue in 2019. Externally, growth in the main economies has shown a
sharper-thanexpected deceleration, which has led its authorities to implement further economic stimulus packages.
The main difference with respect to December's baseline scenario was seen in local inflation. Measured by
the benchmark Consumer Price Index (CPI) calculated by the National Statistics Institute (INE) based on the
updated basket and new methodology, annual CPI variation is significantly below the forecast. This differential
between forecast and actual inflation occurs in a context where activity and demand have behaved as
expected, which in this Report is explained by a lower-than-expected peso depreciation pass-through,
favorable supply factors in some markets and greater capacity gaps than had been estimated until now. Said
gaps do not originate in weaker demand, but in the labor force effects of massive immigration to the country,
an issue that the Bank has brought up in its presentations to this Commissions for some quarters now.
In this context, our projections yield that the convergence of inflation to the 3% target will take almost a year
longer than we estimated in December. This provides room for the withdrawal of the monetary stimulus to
proceed at a slower pace than was announced before by the Board.
This scenario plays out in a context of greater uncertainty in the world economy, where global financial
markets remain very susceptible and more negative scenarios may occur. For the same reason, although we
believe that the evolution of macroeconomic conditions will make it necessary to reduce the monetary
stimulus and that the external impulse facing the Chilean economy has not seen significant changes, we will
continue to implement this process with particular caution.
Let me now share with you some more detail of our assessment of the macroeconomic scenario, its prospects
and monetary policy implications.
II. Recent evolution of inflation
As is well known, in January, the INE updated the CPI basket and measurement methodology, giving rise to a
new CPI series with base 2018=100, that supersedes the former base of 2013. The new CPI uses a basket of
products that responds to the current consumption patterns of the population, taken from the Family Budget
Survey of 2017, and incorporates a series of methodological improvements in the collection of some price
data. This certainly makes the new CPI a more accurate indicator of current inflation. In introducing the new
series, the INE has applied the same procedures of the last two updates, in 2009 and 2014. Thus, for analytical
purposes, it has generated a benchmark series, corresponding to the CPI level calculated with the new
methodology for the months of January to December 2018. This allows estimating the average prices
established by the base of the indicator and twelve-month variations, beginning in January 2019. The series
spliced with the 2013 base CPI remains the official index, that is good for all legal and contractual purposes,
including the calculation of the UF.
In its analysis of the behavior of inflation, the Central Bank uses, as in the previous changes, the benchmark
series, because, for the reasons just explained, the new CPI is a better thermometer of the evolution of
inflationary pressures and because, since it will be governing in the coming years, the information of its past
behavior is more useful for estimating its outlook.
In doing so, an important difference is revealed with respect to the December estimates. Thus, while with the
2013=100 base the CPI accumulated a variation of 2.1% between February and December (eleven months),
with the new basket and methodology (2018 = 100) it accumulated 1.7%. In the case of the CPIEFE index-
which excludes food and energy-the figures were 2% and 1.5%, respectively. With this, at February the
annual change in the CPI and the CPIEFE stood at 1.7% and 2% per year, respectively (figure 1). Compared
with the change in the CPIEFE projected for this date in the December Monetary Policy Report, its current
value is around 80 basis points lower.
Beyond the methodological reasons behind the changes in the figures produced by the new CPI, it is important
to understand the macroeconomic fundamentals of the lower actual inflation. Our analysis identifies three
key factors: first, there are differences in the goods component of the CPIEFE, which point to a lower transfer
to local prices from the peso depreciation throughout 2018. This may be explained by the fact that during this
period the variation of the peso/dollar parity responded to movements of the global value of the dollar, as
opposed to past parity variations (e.g. in 2017) that responded to idiosyncratic shocks to Chile (figure 2). The
difference in the pass-through coefficient of forex variations to inflation according to the origin of the former
was widely documented in a box in the March 2016 Report and today we see it reflected in the recent behavior
of inflation.
Second, there are also differences that could be more linked to supply factors in some markets of products
and services. One example is the increased competition in the car industry, as well as the emergence of
lowcost alternatives in passenger air transport, as seen in the behavior of the CPIEFE for services. The same applies
to the increased competition in special offers of telecom packages mobile phone services. Some of these
phenomena have been captured by the new CPI thanks to some of its methodological improvements (figure
3).
Third, the labor market presents greater slack, resulting from the massive immigration of recent years. Last
December, the INE published the new population projections that use information from the 2017 Census,
which ratified the significant increase in the immigrant population beginning in 2015. According to these
figures, between 2015 and 2019 around 865 thousand people came to the country, which also has a significant
effect on the demographics (figure 4). As we reported to this Commission last December, an immigration
phenomenon of this magnitude has a strong effect on the labor force. Moreover, the immigrant population
has a participation rate in the labor force of the order of 80% according to the 2017 Census, compared with
the native population's which is somewhat above 60% according to the same source.
As we noted in a box in last December's Report, the effects of immigration manifest through supply and
demand channels that together generate an expansionary effect on output and have a limited inflationary
impact. On one hand, the increase in population brings with it an increase in aggregate demand for consumer
goods and services, pushing inflation upward. But, on the other hand, immigration expands the supply of
labor, which moderates wage increases and reduces the marginal costs of companies, putting downward
pressure on inflation. While over time the economy adjusts to accommodate the population increase, it is
unclear which channel will dominate, that of higher aggregate demand or that of the increased labor force.
This will depend on the propensity to save of the immigrant population (considering remittances), the
willingness to work at different wage levels and how fast the capital stock will adjust in response to the larger
scale of the economy. The information of the last few months, with activity in line with forecasts, lower-than
expected inflation and nominal wages decelerating during 2018, suggests that so far, the dominant channel
has been the expansionary effect on the supply of labor.
Thus, it is possible to identify some recent economic phenomena that allow to analytically understand the
fundamentals behind the lower inflation. Some of these phenomena (e.g. immigration and differences in
exchange rate pass through) had been mentioned by the Central Bank in previous Reports, its effective
translation into lower inflation only manifested with the calculation of the new CPI.
III. Recent evolution of activity
Recent months' data confirmed that the economy recovered its dynamism after the break of the third quarter
of last year. As we reported in December, in said quarter activity slowed down more than expected because
of, among other factors, a significantly higher calendar effect because of September's many holidays.
Fourth-quarter data that this effect was temporary, so total GDP closed the year with a growth of 4%, where
3.9% was non-mining. On the demand side, the greater dynamism of investment continues to stand out-
especially in machinery and equipment-, which intensified over the year. Habitual consumption (i.e. non-
durable goods and services) continued to expand in tandem with GDP, while durable consumption
decelerated significantly mainly due to the normalization of volume car sales (figure 5).
About this year 2019, partial activity data for the first quarter show annual variations smaller than those at
the end of last year. This combines a higher basis of comparison and, especially, a poor performance of the
mining sector (figure 6). This worsened in February because of downtime in geographic areas affected by the
intense highland winter, according to the INE's Manufacturing Production Index, which fell 9.4% in said month.
Several indicators suggest that the lower growth of early this year will be a rather limited phenomenon.
About demand fundamentals Regarding the determinants of demand, it is worth noting that borrowing costs
continue to be favorable by historic standards and that both supply- and demand-side conditions have
improved in recent quarters. In terms of expectations, signals are mixed. While consumer expectations (IPEC)
show a decline with respect to the end of the year, the business component (IMCE) shows an improvement
in the same period, where worth noting is the progress in the construction sector. In the labor market, the
national unemployment rate has been stable around 7%.
On the investment side, the latest survey of the Capital Goods Corporation (CBC) ratified the significant
increase in projects under execution that we saw at the end of 2018. It even revised upward investment plans
for this and the next two years, with special emphasis on 2020, with investment in mining projects continuing
to contribute the most according to the survey. Inventories posted a significant increase throughout the year,
where accumulated buildup went from 0.5% to 1.3% of GDP between 2017 and 2018, largely concentrated in
the exporting sector and imports of machinery and equipment.
Chilean exports performed well during 2018, partly reflecting an increase in volume exports from all economic
sectors in general. Worth noting were shipments manufacturing products, which reached their highest
nominal growth since 2011, supported also by the favorable evolution of the international prices of many of
these products (figure 7).
IV. International scenario
Internationally, there has been a more marked slowdown in growth in the main economies. The data was
particularly weak in the Eurozone, with a significant adjustment of trade inside and outside the region in the
fourth quarter of 2018. In China, growth went from 6.8% in the first quarter, to 6.4% in the fourth. Moreover,
concerns about how intense this global deceleration may become have been exacerbated. Different
shortterm activity indicators underperformed the market forecast: the outlook for firms in the manufacturing
sector (PMI) has deteriorated, manufacturing output has slowed or even contracted in several economies and
international trade has weakened (figure 8).
Preoccupation over the weakening of the economies, together with lower inflationary pressures and high
financial volatility, resulted in an increase in monetary and/or fiscal stimuli in several countries. In the US, the
Federal Reserve took a considerable turn in its monetary policy stance, showing itself open to maintaining its
expansionary orientation for some time longer, in contrast to the tighter signals emitted up to the third
quarter. This led to a significant decline in US long-term interest rates. which has even translated into reversal
of the US yield curve (figure 9). For its part, the European Central Bank postponed the start of monetary
normalization and announced new initiatives for liquidity provision. Chinese authorities have announced new
fiscal and monetary packages in addition to those adopted during 2018.
Nonetheless, global financial markets remain susceptible to potentially negative news, as reflected in the
tensions at the end of 2018 and at the statistical close of this Report. Thus, there have been ups and downs in
appetite for risk, capital flows and emerging currencies. The exchange rate in Chile has also been volatile.
Considering the average of the ten days prior to the statistical closing, the real exchange rate (RER) is
somewhat below its average of the last fifteen and twenty years. As a working assumption, the baseline
scenario foresees that the RER will return to these levels during the projection horizon.
The baseline scenario of the Monetary Policy Report states that during 2019 and 2020 the world economy will
grow 3.3% and 3.2%, respectively, less than the 3.7% average of the two previous years and the December
Report's forecast (3.5% and 3.3%, respectively). Chile's business partners will show the same expansion rates
in that period (3.6% in 2017-2018). These projections assume that the US will grow at rates closer to 2%,
gradually approaching trend growth. In the case of China, it is projected to grow 6.1% this year and 6% in
2020, less than in previous years and consistent with the process of achieving lower expansion rates as the
economy grows in size. These projections are somewhat inferior to those observed in the usual
counterparties. In particular, in March the OECD said it expects global growth to grow 3.3% and 3.4% in 2019
and 2020, identical to the latest figures published by Consensus Forecasts and a little below the IMF's January
projections (figure 10).
Turning to the terms of trade, most commodities increased their prices after the December Report. In the
baseline scenario, prices for copper and oil are expected to be somewhat higher than predicted in December.
A copper price of $2.9 per pound is forecast for this year and the next two, which compares with the prices of
$2.85 and $2.80 per pound that we assumed in December for 2019 and 2020, respectively. In the case of oil,
average Brent-WTI average prices are expected of $62 per barrel in 2019 and 2020 (59 dollars for both years,
in December) and $60 in 2021. With this, and the revisions to the historical numbers, the terms of trade should
increase this year by a higher rate than we thought in December, but in terms of levels, they will be similar
(figure 11).
V. 2019 - 2021 Outlook
Our baseline projection assumes that the boost that the Chilean economy will receive from abroad in the next
two years will be milder than it was in the last two. It will be still be positive, however, combining the
downward adjustment of world growth and somewhat more favorable financial conditions than were
foreseen in December. At home, the recent evolution of demand and prospects for consumption and
investment continue to indicate that the economy will narrow its capacity gaps further over the coming
quarters.
About the magnitude of these gaps, however, the mix between lower headline inflation and strong
nonmining GDP imply that they will exceed previous projections, which, as has been noted, is consistent with the
expansion of the labor force coming from massive immigration, among other factors. In order to tone down
uncertainties about the values of this and other structural parameters used in the calibration of monetary
policy, the Board has decided to update these estimates in the Monetary Policy Report next June.
V.1. Activity
In our baseline scenario, we expect the Chilean economy to grow between 3% and 4% in 2019. This range runs
somewhat below our December forecast (3.25% to 4.25%), due to a poor-than-expected mining performance
which, as I just mentioned, is clearly noticeable in the figures early this year. For 2020, we foresee that the
economy will grow between 3% and 4%, a little above our December forecast. Finally, in this Report we
present the first growth projection for the year 2021, that is, within a 2.75% to 3.75% range.
About expenditure, we still estimate that investment will be its most dynamic component, with annual growth
over 6% in 2019. By 2020 and 2021, it should decline to around 4%. Consumption will continue to grow at
rates consistent with GDP. In the fiscal area, our working assumption is that in 2019 the economy will receive
a boost consistent with the approved Budget; from then onwards, the structural deficit will follow the path of
gradual decrease defined by the authority (table 1).
V.2. Inflation
In terms of inflation, given its lower level today and the estimate of somewhat larger capacity gaps, its
convergence to 3% will take longer than we predicted last December. Thus, it is estimated that the CPI will
end this year with an annual increase of 2.6% and return to 3% in the first half of next year. From then on, it
will fluctuate in the vicinity until the end of the policy horizon, that is, the first quarter of 2021. The CPIEFE is
projected to end 2019 at 2.4% and approach 3% in the second half of next year (figure 12).
V.3. Monetary policy
As for monetary policy, the Board continues to believe that the evolution of macroeconomic conditions makes
it necessary to reduce the monetary stimulus over the policy horizon. However, the change in the initial
conditions of the baseline scenario caused by the lower inflation observed-in addition to other adjustments
mentioned above-implies that its convergence to the target requires the pace of MPR normalization to be
slower than anticipated. in December.
For short-term forecasting purposes, we use as a working assumption the MPR trajectory taken from our
March Economic Expectations Survey, which foresees no changes in the MPR at least during the next two
quarters. For the medium term, our projections are consistent with the MPR reaching its neutral level towards
the end of the policy horizon. The Board has estimated for some time that the neutral MPR is between 4%
and 4.5%. This parameter that will also be revised in the June Report.
V.4. Risk scenarios
The base scenario that I have just presented reflects the events most likely to occur with the information at
hand at the close of this Report. There are risks, however, that, if materialized, may reshape the
macroeconomic outlook and the course of monetary policy.
On the external front, despite having steadily input lower growth prospects, the risk balance continues to be
biased downward. The main risk remains that of an abrupt reversal of financial conditions facing emerging
economies, which could be triggered by various reasons, including a more abrupt and widespread slowdown
in world growth or the negative evolution of the various geopolitical tensions that have persisted in the recent
past. Although in such a scenario the main central banks would probably expand their monetary policies, a
lower appetite for risk and declines in commodity prices are also possible, more than offsetting these lower
interest rates.
At home, it is estimated that the risk balance for both activity and inflation is unbiased. First, the massive
immigration of recent years may have a greater impact on growth and inflation. As I said, although in the
medium-term immigration should have an expansionary effect on GDP and a limited one on inflation, it is
unclear how the supply and demand channels will interact, and which one will dominate as the economy
absorbs the population inflow. Second, on the activity side, it is possible for investment to be even more
dynamic if larger-scale projects keep coming, but it can also happen that the greater external risks induce a
more conservative behavior by entrepreneurs and consumers. Third, the expected evolution of inflation could
also be affected if the pass-through of the peso depreciation returns to near average magnitudes earlier than
expected and pushes up inflation of CPIEFE goods. Finally, we cannot rule out a faster depletion of the
oneoff effects of sectoral supply shocks, particularly the heavier competition in some areas.
V. Final remarks
The global economic scenario poses important challenges to our country. For two years now, events have
been unfolding that have added uncertainty to the global growth Outlook, such as the trade conflict between
the US and China or the Brexit resolution. Thus, we have seen several episodes in which global markets have
been stressed, generating less favorable conditions for the emerging world. The most recent of these events
is still underway, putting pressure on economies that are perceived to have weaker macroeconomic
fundamentals.
Chile, being a small economy, commercially and financially integrated in the world, has not been spared these
tensions. As I just mentioned, the impulse we will be getting from abroad in the next two years will be milder
than the one of the last two. And as we have said in a number of Reports, we believe that the external risk
balance is biased downward.
However, we must also be clear that this external scenario finds the Chilean economy on the right foot. Our
growth rates have substantially outperformed those of previous years, investment is the most dynamic
component of expenditure and our country has been absorbing a significant increase in the workforce without
a corresponding increase in unemployment, while wages continue to grow. Today's lower level of inflation
and its implications for the two-year convergence, not only allows adjusting the pace of monetary policy
normalization, but also provides room to monitor and analyze the evolution of external conditions without
the pressure of an imminent adjustment to the policy rate. Plus, there the traditional cushioning effect of the
exchange rate float and a deep local capital market.
Summing up, monetary policy is now in an expansionary position, with the policy rate that has remained low
for quite a while. Although in our baseline scenario we believe that it will still be necessary to raise it in the
next two years, we have also been clear about the convenience of taking a break in the coming months.
Since we began the monetary policy normalization process, we have said that we will conduct this process
gradually and cautiously, ensuring that the economy can adapt to a milder monetary stimulus and be on the
lookout for changes in macroeconomic conditions that advise adjusting the pace of the process. The recent
changes in the international economy and the new inflation measurement associated to the CPI updated
belong to this class of changes. True to its commitment, the Bank has thoroughly examined these
developments, factoring them into its projections, and has concluded that it is necessary to adjust the
expected trajectory of monetary policy. Accordingly, we have put the normalization process on hold for some
quarters, in order to allow inflation to go back to a path of convergence.
In the same way, faced with the uncertainty regarding the value of the structural parameters on which the
monetary policy is based after important economic changes, we have decided to include an update in the June
Monetary Policy Report, which will allow us to gauge its future trajectory.
These actions attest to the Bank's commitment to its institutional mission, as well as its vocation to act on the
basis of solid evidence and rigorous analysis of background information. In this way, we reflect our purpose
of being an institution to which citizens can entrust the protection of price stability and financial stability, as
essential determinants of their well-being.
Thank you.
Figure 1
Accumulated inflation, February - December Evolution of CPI and CPIEFE inflation (1) (2)
2018
(percent) (annual change, percent)
2.5 CPI 2.5 CPIEFE
4.5 4.5
4.0 4.0
2.0
2.0
3.5 3.5
CPI
3.0 3.0
1.5
1.5
2.5 2.5
2.0 2.0
1.0
1.0
1.5 1.5
CPIEFE
0.5
1.0 1.0
0.5
0.5 0.5
0.0
0.0 0.0
0.0
Basket Basket
Basket Basket
18 Abr. Jul. Oct. 19
2013 2018
2013 2018
(1) As from January 2019 the lines use the new indexes with annual base
Source: National Statistics Institute (INE).
2018=100, so they are not strictly comparable with earler figures. (2)
Blue (red) diamonds show the annual CPI (CPIEFE) variation using the
2013=100 basket. As from February 2018, they show the annual change
that is obtained by splicing the 2013=100 basket series with the monthly
variations in the 2018=100 basket.
Sources: Central Bank of Chile and National Statistics Institute (INE).
Figure 2
Exchange rate and goods EFE
(annual change, percent)
6 30
5 25
4 20
TCN (right axis)
3 15
goods EFE (*)
2 10
1 5
0 0
-1 -5
-2 -10
-3 -15
16 16 17 17 18 18 19
16 Jul. 17 Jul. 18 Jul. 19
(*) As from January 2019 the line uses the new indexes with 2018=100 annual base, so they are not strictly comparable with past
figures.
Sources: Central Bank of Chile and National Statistics Institute (INE).
Figure 3
Selected CPI prices
(indexes, January 2018=100)
Mobile phone services
Telecom package services
101 101
105 105
100 100
100 100
99 99
95 95
98 98
90 90
16 17 18 19
16 17 18 19
New cars Air transport services
110 110 160 160
105 105
120 120
100 100
95 95 80 80
16 17 18 19 16 17 18 19
----2013 basket ----2018 basket
Source: National Statistics Institute (INE).
Figure 4
Immigration Chile's population (*)
(thousands of persons) (millions of persons)
20.5 20.5
240 240
2017
20.0 20.0
200 200
19.5 19.5
160 160
2002
19.0 19.0
120 120
18.5 18.5
80 80
18.0 18.0
40 40
17.5 17.5
0 0
15 17 19 21 23 25
92 96 00 04 08 12 16
(*) Population estimates and forecasts using each Census. For 2002 the updated figures
published in 2014 are used.
S N ti l St ti ti I tit t (INE)
Figure 5
Annual GDP growth Domestic demand
(contribution, percentage points) (real annual change, percent)
6 6 16 16
Durable
Total
consumption
Nonmining
3 3 8 8
Habitual
consumption
0 0 0 0
FBCF
Mining
-3 -3 -8 -8
14 15 16 17 18 14 15 16 17 18
Source: Central Bank of Chile.
Figure 6
Imacec (*) Mining activity
(change from previous moving quarter, percent)
(annual change, percent)
3 3 40 40
Mining Imacec
Total
2 2 20 20
Nonmining
1 1 0 0
Mining
output index
0 0 -20 -20
-1 -1 -40 -40
15 16 17 18 19 15 16 17 18 19
Seasonally-adjusted series.
S(*) C t l B k f Chil d N ti l St ti ti I tit t (INE)
Figure 7
Manufacturing exports (*)
(contribution to annual change, percentage points)
15 15
10 10
5 5
0 0
-5 -5
-10 -10
-15 -15
-20 -20
2014 2015 2016 2017 2018
Volume Price Total
(*) Component of price obtained using differential between nominal and real exports.
Source: Central Bank of Chile.
Figure 8
Manufacturing output and global Exportaciones reales y tráfico de contenedores
manufacturing outlook (2)
(contribution, percentage points; original series,
pivot=50) (annual change, percent)
5 56
6 9
PMI (1)
(right
Emerging
Emerging
axis)
4
54
4 6
3
52
2
2 3
50
1
0 0
48
0
Contenedores
Developed
(right axis)
Developed
-1 46
-2 -3
14 15 16 17 18 19
14 15 16 17 18 19
(1) Value above (below) 50 indicates expansion (2) Moving three-month average.
(contraction).
Sources: CPB Netherlands Bureau for Economic Sources: CPB Netherlands Bureau for Economic Policy
Analysis and Institute of Shipping Economics and
Policy Analysis and J.P. Morgan.
Logistics.
Figure 9
Market MPR expectations (*) United States 10-year interest rate
(at December each year, percent) (percent)
3.4 3.4
4 4
Dec. Report
3.2 3.2
3 3
3.0 3.0
U.S.
2 2
2.8 2.8
March
2.6 2.6
1 1
Report
2.4 2.4
0 0
2.2 2.2
Eurozone
-1 -1 2.0 2.0
07.17 01.18 07.18 01.19
14 15 16 17 18 19 20 21 Jul.17 18 Jul.18 19
(*) Fed funds rate for the United States; Euribor rate for the Eurozone.
Source: Bloomberg.
Figure 10
Growth forecasts
(annual change, percent)
3.2 3.2
2.6 2.6
United States
Eurozone
2.9 2.9
2.3 2.3
2.6 2.6
2.3 2.3
2.0 2.0
2.0 2.0
1.7 1.7
1.7 1.7
1.4 1.4
1.4 1.4
19
15 16 17 18
15 16 17 18 19
6.8 6.8
4.2 4.2
China
World at PPP
6.6 6.6
4.0 4.0
6.4 6.4
3.8 3.8
6.2 6.2
3.6 3.6
6.0 6.0
3.4 3.4
5.8 5.8
3.2 3.2
19
15 16 17 18
Figure 11
Terms of trade
(index, 2013=100)
110 110
Dec.18
105 105
Report
100 100
Mar.19 Report
95 95
90 90
85 85
13 14 15 16 17 18 19 20 21
Source: Central Bank of Chile.
Table 1
Domestic scenario
(annual change, percent)
2018 2019 (f) 2020 (f) 2021 (f)
Dec.18 Mar.19 Dec.18 Mar.19 Mar.19
Report Report Report Report Report
GDP 4.0 3.25-4.25 3.0-4.0 2.75-3.75 3.0-4.0 2.75-3.75
Mining GDP 5.2
Non-mining GDP 3.9
Domestic demand 4.7 3.8 3.7 3.3 3.5 3.3
Domestic demand (w/o inventory change) 3.9 3.9 3.9 3.6 3.7 3.5
Gross fixed capital formation 4.7 6.0 6.2 3.9 4.3 3.9
Total consumption 3.7 3.3 3.3 3.5 3.5 3.4
Goods and services exports 5.0 4.1 3.6 2.8 2.9 2.9
Goods and services imports 7.6 5.0 4.5 3.0 2.9 2.6
Current account (% of GDP) -3.1 -2.7 -2.9 -2.8 -2.7 -2.7
Gross national saving (% of GDP) 19.6 20.9 20.1 20.8 20.3 20.4
Nominal gross fixed capital formation (% of GDP) 21.3 22.6 21.8 22.8 22.0 22.2
(f) Forecast.
Source: Central Bank of Chile.
Fig 12
CPI inflation forecast (1) (2) (3) CPIEFE inflation forecast (1) (2) (3)
(annual change, percent) (annual change, percent)
6 6 6 6
5 5 5 5
IPoM
4 4 4 4
IPoM
Dec.18
Dec.18
3 3 3 3
IPoM
2 2 2 2
Mar.19
IPoM
1 1 1 Mar.19 1
0 0 0 0
15 16 17 18 19 20 21 15 16 17 18 19 20 21
(1) As from January 2019 the new indexes with 2018=100 annual base are used, so they are not strictly comparable with
past figures. (2) Gray area, as from first quarter of 2019, shows forecast. (3) Yellow area shows annual CPI inflation using
the 2013=100 basket (blue line) and the annual CPI inflation that is obtained by splicing said series (2013=100 basket) with
the monthly variations of the 2018=100 basket starting in February 2018 (purple diamonds).
Sources: Central Bank of Chile and National Statistics Institute (INE).