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

in mind early on was that the economies in europe, particularly in the south, would adopt sound macroeconomic policies following in the steps of germany. nonetheless, it seems that some economies, such as greece, only took advantage of the low risk premiums, over - borrowing and creating a deficit way bigger than set forth in the stability and growth pact. the consequence was extreme financial vulnerability that is proving very difficult to resolve today. for the time being, risks seem to be well contained, but the lack of credibility of the markets has resulted in some agents speculating with the possibility of some member country being discharged from the eurozone. this seems implausible, as it would trigger a major financial crisis, a risk that policy makers in europe are certainly aware of. it can be discussed at length if it was a good idea to let one or another country in, but once officially a member and in a situation as frail as it is today, the decision becomes irreversible. at any rate, public debt troubles in europe are quite complex and call for a global, permanent solution. according to the forecasts contained in the third review of greece ’ s stand - by agreement with the imf, from now to 2020 greece must generate a primary fiscal surplus of 6 % of gdp per year. thus it could take its public debt from its present - day levels of around 1. 5 times its gdp to 1. 3 times. this is a major adjustment if we consider that in 2008 the country posted a primary deficit of 4. 5 % of gdp, all this under the assumption that it will pay an interest rate between 6 and 7 %, and the interest rate is today around 16 %. certainly, if the rates don ’ t go down it will be hard for greece to recover easy access to private credit markets, as hard as obtaining permanent funding by official agencies. from these crossroads, greece will have to find new permanent solutions that allow it to return to fiscal solvency and distribute the losses without jeopardizing financial stability. another complex aspect of the situation of developed economies is their weak recovery. although their financial systems and economic activity have begun picking up, they have been unable to significantly reduce their high unemployment rates and their large output gaps ( figure 3 ). in addition, growth prospects are poor and, as we have seen in recent weeks, each piece of information that is disclosed may put substantial volatility on the market ’ s evaluation of the strength of the economic recovery. furthermore