last, but not least, in the past few years, these and other factors have pushed economic growth above its potential. this made it necessary and appropriate to pursue a slower pace of growth, more sustainable over time. overall, output and expenditure have weakened beyond expectations, taking us and all economic agents by surprise for the intensity and persistence of the slowdown. already in last june ’ s report we said that part of the drop in investment could not be attributed to the variables that traditionally determine this component of domestic demand. the negative surprise in output has to do with some of the developments that we envisioned a few months ago contributing less to growth than we thought then. for example, the economic recovery of our main trading partners has been somewhat slower than expected, especially in latin america. downward corrections to mining and energy investment projects planned for 2014 have been sharper than estimated, as reflected in the latest survey of the capital goods corporation. in addition, the depreciation of our peso, although an important incentive for the export sector, in the short term has negatively affected the imported components of domestic expenditure. along with this, it is worth noting the decline in economic expectations in recent months, which, on one hand, are a reflection of this scenario of slower growth, but on the other, may end up negatively affecting domestic demand. expectations for investment and consumption have been falling for quite some time already, and more sharply in the most recent past. the economic perceptions index ( ipec ) and the monthly business confidence indicator ( imce ) have posted continuous declines this year. as of july, the two are below their neutral levels ( figure 1 ). besides, they show significant deterioration in some specific items, most notably those related with the convenience of buying durable goods, the perception about employment and the appropriate level of inventories. meanwhile, the business perceptions report published by the bank in august revealed that firms perceive an increase in uncertainty, which has influenced both their own and their customers ’ investment and spending decisions. increased uncertainty naturally results in investment projects being pushed back ( the “ wait - and - see ” option in specialized jargon ), which could partly explain the reduction in investment. as i said, monetary policy has responded strongly and decisively to the worsening of our domestic scenario, generating significant monetary impulse. by mid - 2013 we expressed the bis central bankers ’ speeches need to adopt a more expansionary monetary stance that would ensure that inflation would converge to the target. accordingly, since october last year

flows. this year, the world economy is projected to suffer a recession, combining drops in activity in the developed world with weak expansion in china. in this scenario, it is worth mentioning a contraction in the united states, where preliminary labor market figures point to a major impact on the economy. in the eurozone, the already low dynamism of its main economies ( i. e. germany, france, and italy ) and an already complex banking system situation, pose major challenges for stimulus policies. china will grow this year by 3 %, its lowest since 1990, with important repercussions in the rest of the world, both because of its integration in the value chains and because of its weight in the trade of some countries, including chile. the impact on trade is compounded by the negative impact on income as a result of falling commodity prices ( figure 4 ). especially relevant for chile is the drop in the copper price, which approached usd 2 per pound during march, and the forecast for this year is an average of usd 2. 15 per pound. this negative effect will be largely offset by the lower oil price, which dropped to levels between usd 20 to 30 per barrel in march. hence, the terms of trade deterioration should be less than 1 % in 2020. the drop in fuel prices will also help to contain the inflationary pressures and will contribute to sustain disposable income ( figure 5 ). a second transmission channel relates to the worsening of financial conditions. the global increase in risk perception and deep adjustments of financial prices restrict access to goverment and corporate funds. this has driven various central banks to take action to ensure the proper operation of the markets. in chile, among other measures, the cbc board adjusted the operation of liquidity programs it has been applying since november 2019, included corporate bonds among eligible collateral for all the liquidity operations in pesos offered by the bank and launched the purchase of banking bonds from the open - market operations system ( soma ) participants for an amount in uf1 equivalent to up to usd 4 billion. at our monetary policy meeting yesterday we also communicated that we will raise the amount of this bank bond purchase program to up to usd 8 billion. and for the outstanding balance ( usd 5. 5 billion ) the maturity constraint for eligible instruments will be eliminated. the steep drop in companies ’ activity because of social isolation of workers and clients and their inability to carry on their normal tasks has resulted in a significant increase in their financial