large movements in most currencies around the world. as for the chilean peso, in the middle of march it was trading above 640 units to the dollar, to later drop to near 620 pesos per dollar at the statistical cutoff of this report ( figure 3 ). the peso depreciation cycle that began in 2013 stands out as the longest in the last decade and it occurs in the context of a gradual economic slowdown and not a sharp recession. this is one of the main reasons behind inflation remaining above 4 percent. the data indicate that the pass - through coefficient from the exchange rate to inflation has been in line with historic patterns, although in the upper part of available estimates. besides, the peso depreciation has had different timing than most emerging or commodity exporting economies. the earlier adjustment of the chilean economy, in terms of both private expenditure and the monetary policy reaction, meant that for the larger part of 2014 our currency was one of the most depreciated globally. subsequently, as the rest of the emerging economies entered a more marked adjustment cycle, those differences narrowed and the peso even appreciated in multilateral terms ( figure 4 ). as of march, the real exchange rate is somewhat above its average for the last two decades ( figure 5 ). domestic activity has behaved as foreseen in december, although last year closed with somewhat higher growth than forecast in the previous report : 1. 9 percent. revisions to earlier figures and a somewhat stronger fourth - quarter growth explain this result. partial firstquarter figures continue to reveal moderate growth, but definitely better than the figures it showed since mid - 2014. on the demand side, there is no big news either with respect to the end of last year. aside from specific factors, consumption and investment remain weak. durable consumption and investment in machinery and equipment continue to grow at low or negative annual rates, albeit with some marginal stability. anyway, it is worth noting the greater impulse from fiscal spending, particularly public investment, and the positive effect of the peso depreciation in the productive performance of some tradable sectors. the labor market continues to show more strength than previously foreseen. the unemployment rate, despite a marginal increase, is still low. annual growth in salaried employment has picked up again in recent months, although job creation in the most cyclesensitive sectors has remained slow. meanwhile, nominal wages continue to grow at a strong pace, partly because they are generally indexed to past

currency parities and the short - term inflation outlook. on one hand, important surprises regarding the timing and the speed with which the federal reserve will raise the benchmark rate may cause significant volatility in global financial markets, pushing interest rates up and further appreciating the dollar. in such a scenario, one cannot rule out that, additionally, we observe an abrupt portfolio rebalancing, given the low level of long - term interest rates and the high stock prices in the united states. although the latest statement by the federal reserve has attenuated the possibility of drastic changes, the risk is still present. on the other hand, there is the situation some emerging markets are enduring, where the macroeconomic scenario could be further complicated if their commodities continue to trade at low prices. this risk is most important for latin america, as it compounds with complex economic and political factors. furthermore, in several countries in the region, fiscal and current - account deficits persist, making the necessary adjustments more difficult and costly. this is not the case of chile, where the policy framework has allowed for a timely macroeconomic adjustment in the last year and a half. and let ’ s not forget the geopolitical conflicts in the middle east and parts of europe, with which we have sadly lived for quite some time. in europe, there is the greek situation and the quirks that have characterized the agreements to finance the debt. on the positive side of risks, it could also happen that the recovery is stronger in the eurozone, which could mean a stronger boost to the world economy and chile. in addition, it is possible that the effects of the drop in the oil price is larger than projected and also that this price remains low for longer. finally, there is still the risk associated to lower growth in china and its consequences on the price of copper. the state of the chinese financial system and real estate sector continue to draw the most attention. at home, the main risk has to do with the evolution of inflation, mainly because of the unrelenting exchange rate depreciation and its accumulated effects on costs. this, in a context of margins that seem to have narrowed because of the high annual growth in nominal wages and the limited pass - through of lower fuel prices in some sectors. therefore, the materialization of an external risk scenario that triggers a significant additional depreciation of the peso may have substantial effects on the short - term inflation outlook, which will depend on the state of