Rosanna Costa and economic projections for 2023: “Going forward, inflationary pressures should subside”

In the midst of a complex scenario marked by the highest inflationary cycle in recent times, the president of the Central Bank (BC), Rosanna Costa, delivered the projections of the issuing entity for the economy in 2023, ensuring that inflationary pressures should begin to subside, since it is beginning to “close its gaps”.
The issuing institute changed its forecast of GDP decline for next year to between -0.75% and -1.75% and, in addition, raised the inflation estimate for the end of the same year to 3.6% compared to 3.3% in last September’s report.
However, Costa explained to La Tercera that the economy is complying with the adjustment, that inflation will subside and, as of the second half of 2023, activity will resume its course. After the entity maintained the guiding interest rate at 11.25%, Costa pointed out that the rate will remain at the same level “until macroeconomic conditions indicate that the trend of inflation to 3% is consolidated.
The projections of the issuing entity for the CPI at the end of 2023 is 3.6%, a figure different from that estimated by various analysts, who place the number between 4% and 5%. In that sense, Costa explained the fundamentals of the BC.
“What we have seen in this period is the result of an imbalance in our economy and that has been tried to correct with monetary policy and the contribution of fiscal policy. Additional external shocks have been installed on top of this,” he said.
“We started in March with a diagnosis of a short-lived war over Russia’s invasion of Ukraine. Finally, the war has been longer and its effects much more persistent. We had more inflation in developed countries and the market reaction was significant. That is, a series of shocks have emerged that have pressured inflation,” Costa added.
As for the projections, the BC helmsman said that “going forward, what we see is an economy where inflationary pressures should subside, and that is beginning to close its gaps. We no longer have the 5% GDP gap that we showed in previous quarters of 2022, and we are projecting a convergence, a closing of the gap for the first quarter of 2023 and that will be negative going forward.”

“We are clearly seeing non-mining GDP falling in the second and third quarters. We are seeing consumption that begins a trajectory of regularization and begins to fall. We see ahead that the labor market does not present the narrowness that we saw previously, with real wages that are falling and households that have been normalizing their excess liquidity, “concluded Costa.

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Original source in Spanish