translated from Spanish: Gemines report punctures the balloon of Piñera’s economic optimism: «Reasonable thing to do is to revise down the estimate for first-quarter activity»

In the framework of the Enade 2021 President Sebastián Piñera assured that, despite the difficult times, «the best is still ahead and is yet to come, without prejudice to all the difficulties, adversity, and pains that our society and Chilean families have had to face».
But the Representative’s optimistic vision contrasts with that of consultancy Gemines, from where they say it would be reasonable to revise down the estimate for first-quarter activity «from slight growth to a new contraction.»
The Mandate’s sayings were landed by The Consultant of Tomás Izquierdo who noted, in her report number 484, that when many of us thought that the second wave of Covid-19 contagions would occur from the second trimester, at which point the vaccination process would have some progress, «unfortunately everything indicates that this was ahead.»
According to the economist’s report, the numbers confirm significant growth in the number of contagions, which is likely to intensify over the next two months and will surely force the authorities to dramatically increase restrictions on mobility in several urban centres.
«The above is already having a negative effect on economic activity, which will surely be more marked in February and eventually also in March,» says Izquierdo.
Thus, what was reasonable under Gemines would be, contrary to President Piñera’s put forward, to revise down the estimate for the activity of the first quarter «from slight growth to a new contraction».
«This means delaying the recovery of activity and, by the way, learning four consecutive quarters of the fall, from the second of 2020 to the first of this year,» they warned from the consultant, while also auguring that only from the second quarter will we begin to see positive numbers in the activity. This will be explained, according to Gemines, «partly by a gradual recovery of this and, mainly, by a very low basis of comparison, given the strong negative impact that the pandemic already caused in the second quarter of last year».
Among the elements that will contribute to this recovery, as Thomas Izquierdo himself points out, is the export sector, where China’s good performance, the main destination of our exports, will make a significant contribution, in addition to the gradual recovery in demand from the rest of the world.
Investment, while growing, highlights, «will only record a partial recovery after a deep fall last year. Institutional political uncertainty, idle capacity and estimates of slow recovery in demand are all factors that tend to slow the uptick in investment. The exception will be in direct public investment and in the export industry, where we can expect greater dynamism.»
Finally, with regard to consumption, which had a major rebound towards the end of last year, mainly the positive effect on the disposable income of families from AFP withdrawals, they predict that it will «moderate their growth to the extent that it begins to rely more directly on self-employment income, which will remain heavily punished in a high-unemployment scenario.»
However, they conclude from Gemines, «this year we would record an increase in the order of 4.5%, which means that we will not fully recover the fall in the order of 6% scored last year.»
See the full report below:
GEMINES REPORT No. 484 by El Mostrador on Scribd

Original source in Spanish

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