is, however, less likely that at the end of last year. the us economic data of the last months have been a pleasant surprise. the labor market and households ’ expenditure seem to have behaved better than forecast. although, the difficulties that persist in the labor market and the fiscal adjustments that are needed explain the continuing doubts as to how true and sustainable the recovery we are currently witnessing is. in spite of the more positive indicators, the fed authorities extended from 2013 to 2014 the period in which it expects to keep interest rate at minimum levels. certainly, the problem of fiscal indebtedness continues. in emerging countries the data are diverse. over the course of the second half of 2011 we witnessed a generalized deterioration of consumer and business expectations. neither case can be compared to what happened between late 2008 and the beginning of 2009. generally, the data show a deceleration of activity. nonetheless, it is difficult to identify how much of this decline is due to a lower external stimulus, how much is accounted for by a natural slowdown in each economy, and what part is explained by particular events. all these elements add up to a situation in which, although the external scenario is not worsening, the belief that risks have disappeared is far off. it is possible to think that the likelihood of extreme scenarios is low, but, in my opinion, it is still there. more challenges for monetary policy as already mentioned, the change in how the global panorama was perceived led many emerging economies to change their views on their future economic policies. this made them halt their processes of lowering expansiveness and / or made them resume impulse. however, the new change of mood brought about by the greater calm of the beginning of the year, coupled with geopolitical factors, has again put us in a dilemma. on one hand, probably as a result of the recent memory of the late 2008 and early 2009 global confidence crisis, most economic authorities quickly set up a close monitoring system and prepared a batch of instruments to implement a quick offsetting of the adverse effects of a global crisis. however, time has shown that the effects of the crisis of the eurozone area have been fairly limited so far. financial markets have suffered the biggest impacts, but trade, output and employment have not been greatly affected. in chile, activity and domestic demand, specially consumption, have not worsened significantly. this does not mean that our vision of the effects that the crisis in the developed world will have on our economy or the rest of the

without maintaining negative gaps for a prolonged period of time, as was once projected to occur. the projections that i will present to you assume that the economy will continue to grow in the coming quarters, with increasing investment and consumption, benefiting from factors such as the higher copper price, the decrease in the real exchange rate ( rer ) and steadily improving financial conditions. considering this scenario, at our monetary policy meeting yesterday we decided to lower the monetary policy rate by 25 basis points, to 5. 75 %. with this, the mpr has accumulated a drop of 550 basis points in the last year. the macroeconomic scenario i will begin my review of the macro economy with a quick look at the movements of domestic demand and activity. as expected, activity has been increasing. in the first quarter, the seasonally adjusted gdp series again posted an increase over the previous quarter, by rising 1. 9 %. as anticipated in the last ipom, and confirmed by the imacec of march and april, part of this growth came from supplyside factors, which have been reversing. our economy continues to show heterogeneity among sectors. the dynamism of services continues to stand out, along with the rebound of some branches of commerce. the weakness of construction continues to be the main counterpoint, with activity levels remaining low. on the other hand, the greater momentum of exports has favored the performance of some sectors, which has been influenced by the increase in the international prices of certain products, among other elements ( figure 1 ). final domestic demand — minus inventories — has been regaining momentum. its performance in the first quarter exceeded expectations, especially in consumption. the gradual recovery of household spending has taken place against the backdrop of rising employment and real wages, which have been underpinning the growth of the wage bill. the services component remains the most dynamic component of private consumption, along with higher demand for non - durable goods in the first quarter. government consumption also outpaced projections ( figure 2 ). while still weak, gross fixed capital formation ( gfcf ) ceased its deterioration observed in the second half of last year. when corrected for seasonality, gfcf had a zero quarterly variation in the first quarter, reflecting a more stable performance of machinery & equipment and construction & works. within the latter, the building component remained slower than the engineering works one, a trend that would continue according to partial information for the second quarter. in any case, all