After the publication by the Central Bank (BC) of the Monetary Policy Report (IPOM) corresponding to the month of September, where it was projected that Chile will close 2022 with an annual inflation of 12% and it was confirmed that the country will enter into recession next year, the experts’ analyses began.
In this regard, the market strategist of the investment company XTB Latam, Benjamín Castillo, commented on the report and explained its results, stating that the IPOM “allows us to see economic predictions that this entity has for the future, for the coming quarters, and for the coming years, therefore, it is quite important what the Central Bank thinks about this”, since with these data the BC is constantly stabilizing and updating the information on the projections and what is happening in recent quarters.
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On how this information affects the day to day, he indicated that these economic figures have a “quite direct impact for the common of all people.”
“It affects that the considerations that the Central Bank has, the projections can encourage to have more or less investment and can also give us an overview of what inflation can be. We have already seen that inflation, the increase in basic prices impacts all of us and also that when investment retracts and the scenario for the future becomes more complex, especially in an extreme case when investment is lacking, that regularly leads to an increase in unemployment, “he said.
In addition, he pointed out that the projection of this last IPOM, remains in general lines to what is expected, where it is estimated for this year a GDP close to 2.75-2.25%. While for 2023 the negative expectations of economic growth of -1.5 to 0.5 are also maintained.
“This means that, in the opinion of the Central Bank, this year we will have what is called a technical recession, which is two consecutive quarters of GDP growth or negative GDP, so this is not positive news, because there are no projections of increase or economic growth,” he said.
Finally, Castillo referred to the fact that within the same document presented to the Senate, the Central Bank says that “gross fixed capital formation continues to reduce and this is argued in a scenario where uncertainty is going away and business confidence continues to deteriorate, that is, the central bank’s judgment, the conditions are currently not optimal to attract investment because the question of the new constitution is not yet settled and as long as that is not settled, investment will probably continue to be retracted.”
“As long as there is no certainty and this is tremendously relevant because we will not be able to see a significant fall in the dollar to these levels, we will not be able to see inflation fall after these important increases and all this undoubtedly impacts our economy and of course our pockets,” said the strategist.
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