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Peso
stopped downward trend in December. In December, the peso
gained some ground and reversed the depreciation trend that had persisted
since April 2000. The exchange rate ended the year at 573 pesos per
US$, which represents a nominal depreciation of 7.9% in 2000. From
end of March, when the currency reached a temporary high, the nominal
depreciation has amounted to 12.4%. The peso was boosted in December
by anticipated capital inflows in the wake of various foreign takeovers.
For 2001, no such takeovers are in sight. In fact, the widening of
the pension funds’ ability to invest abroad, which is currently being
discussed in Congress, could prompt net capital outflows, thus
contributing to further peso weakening. Panellists, however, do not
anticipate the currency to loose substantial ground this year.
According to this month’s Consensus, the peso will remain stable, ending
the year at 577 pesos per US$.
Trade
balance deteriorating in November. In November, the trade
balance registered a US$ 41 million deficit following US$ 157 million
surplus registered in October. The deterioration in the trade
balance was prompted by a moderation in annual export growth from 27.7% in
October to 6.0% in December, while import growth picked up from 19.6% in
October to 24.1% in November. Sluggish growth of copper exports
(+4.0% year-over-year after 32.5% yoy in October) was mainly responsible
for the lower export growth in November although non-copper exports also
experienced a slowdown from 24.2% in October to 7.3% in November.
Imports on the other hand, were boosted by intermediate and capital goods
imports (+25.6% and 32.6% yoy respectively), whereas consumer goods
continued to grow at a more modest 10.4% clip. The annual trade
surplus reached US$ 1.4 billion in November, but is expected to have
dropped to US$ 1.3 billion in December 2000 according to this month’s
Consensus. In 2001, the trade surplus will decline further to US$
893 million.
Note:
The above text is an abridged version of the LatinFocus Consensus Forecast
briefing on Chile. For more details please click here.
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