the upper bound of the tolerance band. of course these numbers describe a complex economic scenario, which makes us wonder what caused it and how we have dealt with it. let me use the last minutes of my intervention bis central bankers ’ speeches to visit these topics briefly, and go in more detail into how monetary policy has behaved in this adverse economic environment. many factors lie behind our low growth, some of which have been more intense than previously thought. lately, this has led not only us but also market analysts and international organizations to make significant downward corrections to the growth outlook for chile. just as a reference : in march 2014, 90 percent of the analysts consulted under our economic expectations survey thought that gdp would grow by 4 percent or more in 2016. two years on, 90 percent are betting on less than 2. 1 percent. what caused this change in the forecast? to begin with, the world economy is undergoing an important process of reconfiguration, which entails deep changes that have proven not only more intense, but also of a much more persistent nature than expected. among them, it is worth singling out the evolution of the chinese economy and its major effects on the commodity markets. the effects of this phenomenon have reflected strongly in a sharp reduction in mining investment, of nearly three points of gdp in the past few years, putting a brake in our economy, especially considering that in previous years this sector was an important driver of growth. the situation in china has not only affected the prices of commodities. in addition, the uncertainty surrounding the changes in the chinese economy has driven up global risks. after all, never had an emerging economy played such an important role in the world economy. secondly, the global financial crisis of 2008 hit the developed economies harder than we originally thought. the wounds it left have constrained their economic recovery and pushed them to experiment with ultra - expansionary monetary policies. this, coupled with the fragilities of many emerging economies, has led this group of countries to face tighter financial conditions than they did some quarters ago. the weakness of the world economy and the higher volatility in global financial markets has certainly taken a toll on economic expectations. but in chile, the business climate has also been affected by the years - long debate about what changes we must make to meet the challenges of being a middle - income country in the twentieth century aspiring to become developed in the shortest time possible. in my opinion, it would be self - indulgent to blame all our problems

a strong economy, but we soon had to realize that the strength of the currency was not due to a fundamentally sound economy but rather the outcome of policies inducing currency misalignment. i would like to draw your attention to the fact that i have not included a flexible exchange rate as one of the principles, in order to avoid dogmatism. but in our country, experience overwhelmingly shows that exchange rate flexibility, managed pragmatically, is the most adequate system for us. this regime some times involves drastic exchange rate adjustments, which can be costly to many firms. the alternative is a more rigid exchange rate, where fluctuations in foreign currency supply are mirrored by fluctuations in domestic credit cost and availability, which can be very detrimental to the financial system ’ s soundness and to firms. more rigid systems simply put off real - sector adjustments, but in the meantime capital flows, credit availability for firms and inflation are all affected and eventually the value of the currency is eroded and the higher nominal exchange rate does not lead to a higher real exchange rate. on the other hand, a floating exchange rate allows more rapid adjustments and the next movements of the exchange rate are uncertain, preventing the market from betting on one direction. thus we avoid repeating past mistakes and returning to the days where prospects of gradual appreciation artificially cheapened foreign borrowing and induced massive capital inflows. another important factor in determining the exchange rate are pressures from fiscal policy. for more than twenty years, chile has benefited from a responsible fiscal policy, using it counter - cyclically when the situation warranted. questions of budget go beyond macroeconomic considerations but the fact is that in the present circumstances our economy has started to take off and does not require an additional boost from fiscal policy. the finance minister ’ s recent statement on the budget aims towards reducing the structural fiscal deficit and is fully coherent with assumptions in our latest monetary policy report. now, from the standpoint of export development, several aspects are worth highlighting. firstly, since the mid - 1970s, chile adopted an ambitious agenda of insertion into the world economy. this drive has accelerated and deepened over the years. some sectors of the economy that were protected by international trade barriers had to adjust. eliminating protection meant that each productive activity had to focus on its own comparative advantages and the export sector benefited from this structural change, as confirmed by the sustained growth of exports as a percentage of gdp. in the 1970s, goods and services exports accounted for about 10 % of gdp ( measured in pesos