L ATI N FO CUS CONSENSUS FORECAST

Contents
Chile ............................................ 2 Calendar .................................. 1 2 Notes ........................................ 1 3 Order Form .............................. 1 4

December July 201 1 2010

Publication date: 12 July 2011 Information available: up to and including 10 July Forecasts collected: 4 - 8 July 2011 Next edition: 9 August 2011

Arne Pohlman Chief Economist Gerardo Morn Senior Economist Armando Ciccarelli Senior Economist

Ricardo Aceves Economist Joan Enric Domene Economist Mateusz Reimann Economist

Ricard Torn Economist Joel Bevin Economist

FocusEconomics 2011 ISSN 2013-648X

FOCUSECONOMICS
Economic Forecasts from the Worlds Leading Economists

Gran Via 657 E-08010 Barcelona, Spain Phone: +34 932 651 040 Fax: +34 932 650 804 info@focus-economics.com www.focus-economics.com

FOCUSECONOMICS

Chile

July 2011

Chile
Chile

Outlook improves
Economic activity expanded strongly in May, which suggests that economic growth remained robust in the second quarter. However, exports decelerated in June, expanding 17.1% annually, down from the strong 43.6% increase in May. Nevertheless, in its quarterly Monetary Policy Report from June, the Central Bank raised its economic growth forecast to a range between 6.0% and 7.0% this year, amid strong economic activity. Consensus Forecast panellists expect the economy will expand 6.4% in 2011, which is up 0.1 percentage points from last months forecast. Next year, the panel projects the economy to grow 5.0%. Inflation inched up from 3.3% in May to 3.4% in June. At its meeting on 14 June, the Central Bank raised the policy rate by 25 basis points to 5.25%. Consensus Forecast panellists expect inflation to close the year at 4.2%, which is down 0.2 percentage points from last months forecast. For 2012, panellists expect inflation to fall to 3.3%.

LONG-TERM TRENDS | 5-year averages

Population (million): GDP (USD bn): GDP per capita (USD): GDP growth (%): Fiscal Balance (% of GDP): Inflation (%): Current Account (% of GDP): External Debt (% of GDP): 2000-04 15.1 76 5,028 4.0 0.1 2.8 -0.5 53.6 2005-09 16.1 152 9,449 3.3 4.1 4.2 2.1 37.7 2010-14 17.1 233 13,604 5.3 0.6 3.0 -0.5 40.9

Joan Enric Domene

Economist

REAL SECTOR | Economic activity picks up in May In May, economic activity expanded 7.3% over the same month last year, according to the monthly indicator for economic activity (IMACEC, Indicador Mensual de Actividad Econmica). The reading came in above both the 6.3% increase registered in April and market expectations of economic activity growing 6.8%. The Central Bank also noted that May had two more business days than the same month last year, adding approximately 1.2 percentage points to the May print. According to the Central Bank, the May increase mainly reflected strong growth in the manufacturing sector, next to buoyant activity in the retail and transportation sectors. A month-on-month comparison corroborates the acceleration suggested by the annual figures, as economic activity rose 0.43% over the previous month in seasonally adjusted terms following the 0.33% increase in April. In spite of the robust expansion in May, annual average growth inched down from 7.3% in April to 7.2%, a break in the upward trend in place since November 2009, which was only previously interrupted in March 2010. In its quarterly Monetary Policy Report from June, the Central Bank raised its economic growth forecast to range between 6.0% and 7.0% this year. Consensus Forecast panellists broadly share this view and see economic activity growing 6.4% in 2011, which is up 0.1 percentage points from last months forecast. For 2012, the panel sees economic growth moderating to 5.0%. OUTLOOK | Business confidence drops in Q2 In the second quarter, the business confidence index (IEE, ndice de Expectativas Empresariales) produced by the Cmara de Comercio de Santiago (CCS) dropped to 68.8 points from 73.4 points in the previous

Economic Activity | variation in %

2.0 8.0

1.27 1.0

1.27

1.20 0.95 0.60 0.56 0.33 0.06 0.17 0.12

6.0

0.46 % 0.0

0.43

4.0 % 2.0

-0.30 MoM s.a.(left scale) May Jun Jul Aug Sep Oct Annual average yoy (right scale) Nov Dec Jan Feb Mar Apr May

-1.0

0.0

Note: Monthly indicator for economic activity (IMACEC). Month-on-month changes of seasonally adjusted indicator and moving annual average growth rate in %. Source: Chile Central Bank and FocusEconomics calculations.

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FOCUSECONOMICS
Business Confidence

Chile

July 2011

80

70 long-term average 60

quarter. Confidence dropped for a second consecutive quarter suggesting slower investment growth in the months ahead. That said, in spite of the fall, the index remains above the 50-point threshold that separates optimism from pessimism as well as the long-term average (67-points) and thus points to an ongoing expansion in business investment. The quarterly drop was broad-based, as most sectors reflected notable deteriorations, especially industry and services. In addition, investment and employment expectations deteriorated over the previous quarter as well as the economic outlook for the next twelve months. Sales represented the only exception, with survey participants expecting high copper prices to boost sales in the natural resources sector. Consensus Forecast participants expect fixed private investment to grow 15.0% in 2011, before moderating to 10.2% in 2012. OUTLOOK | Consumer confidence drops in June

50

40 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11

Note: Business Confidence Index (IEE, Indice de Expectativas Empresariales). Values above 50 indicate optimistic perception, below 50 indicate negative perception. Source: Cmara de Comercio de Santiago (CCS).

Consumer Confidence
60

55

50

45

In June, the consumer confidence index, (IPEC, ndice de Percepcin de la Economa) produced by Adimark GfK fell to 44.1 points from 47.2 points in May. That said, consumer sentiment dropped 3.8 points from the level registered in the same month the year before, when the index stood at 47.9 points. With the June drop, consumer sentiment moved further below the 50-point threshold that separates optimism from pessimism, which does not bode well for consumption in the coming months. The deterioration was broad-based as all subcategories deteriorated over the previous month. Consumers were pessimistic about the current national economic outlook. In addition, respondents reported a lower willingness to make major purchases. Consensus Forecast participants expect total consumption to grow 7.6% in 2011 before moderating to 5.5% in 2012. MONETARY SECTOR | Inflation accelerates in May on higher food prices In June, consumer prices rose 0.2% over the previous month, which was below both the 0.4% price rise recorded in May and market analysts expectations of a 0.3% increase. The monthly increase mainly reflected higher prices for food and non-alcoholic beverages as well as for housing, which were partially offset by lower prices for clothing.
4.0 0.8

40

35

30 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11

Note: Consumer confidence index (IPEC, Indice de percepcin de la economa). 50-point threshold indicates equal number of positive and negative responses. Source: Adimark GfK.

Inflation | Consumer Price Index

1.0

0.6 0.5
%

0.4 0.3 0.2 0.1 0.0 0.1 0.1 0.3

0.4 0.2

3.0

% 2.0

As a result of the price increase, annual headline inflation inched up from 3.3% in May to 3.4% in June. The core inflation index, which excludes volatile categories such as oil, fresh fruits and vegetables, inched 0.1% higher over the previous month. Despite the increase, annual core inflation inched down from 2.5% in May to 2.4% in June. The Central Bank has a medium-term inflation target of 3.0%, with a 1% tolerance margin. In its last quarterly inflation report from June, the Bank lowered its year-end inflation expectation from 4.3% to 4.0%, before moderating to 3.0% by the end of 2012. Consensus Forecast panellists expect inflation to close the year at 4.2%, which is down 0.2 percentage points from last months forecast. For 2012, inflation is expected to fall to 3.3%. MONETARY SECTOR | Central Bank continues to tighten the reins At its latest monetary policy meeting on 14 June, the Central Bank raised the policy rate by 25 basis points to 5.25%, in line with market expectations. The hike marked a slower tightening pace after the Bank had increased rates by 50 basis points at its three previous meetings.

0.0 -0.1

Monthly (left scale) -0.5 Jun Jul Aug Sep Oct Nov Dec

Annual (right scale) 1.0 Jan Feb Mar Apr May Jun

Note: Year-on-year and monthly variation of consumer price index in %. Source: Chile National Statistical Institute (INE).

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FOCUSECONOMICS
Monetary Policy Rate | in %
10.0

Chile

July 2011

8.0

6.0 % 4.0

According to the Bank, commodity prices remain high and concerns regarding financial risk in Europe have intensified. In addition, the Bank highlighted a reversal of private inflation expectations, which nonetheless remain above target. The next meeting is scheduled for 14 July. The Central Bank reiterated that it will continue to lift interest rates over the coming months, although the pace of increase will depend on inflationary expectations, indicating that the Bank may opt to pause its series of rate hikes initiated in May 2010 before tightening further towards the end of the year. Against this backdrop, Consensus Forecast panellists expect on average that monetary authorities will raise the interest rate to 5.85% by the end of 2011. In 2012, the benchmark interest rate is expected on average to end the year at 5.91%. EXTERNAL SECTOR | Copper prices inch up in June Copper prices rose marginally in June, up 0.8% over May to reach USD 9,301 per tonne (equivalent to USD 4.22 per pound), after prices had moderated for three consecutive months. Despite the June price increase, copper prices remain well below the USD 9,858 per tonne peak recorded in February, which had marked the highest end-of-month level on record. In annual terms, copper prices are up 42.8% higher than in the same month last year. Prices are expected to remain elevated throughout the year, as Chinese copper demand strengthens and supply remains a concern. On 11 July, labour unions called for a 24-hour strike to protest against the restructuring of the state mine. The strike was nation-wide and affected all six Codelcos mines plus a refinery. In addition, on 5 July, the Collahuasi mine operator announced that adverse weather conditions had disrupted output without giving details; however, unions calculated a 30%-40% loss in output. These events are likely to stoke supply concerns, exerting further upward pressure on copper prices. On the other hand, Xstrata Plc, one of the Collahuasi mine owners announced on 1 July that copper production will increase in the second half of the year to meet its annual output target, as the mine prepares to reopen its port in northern Chile after an incident forced its closure in December last year. High prices for copper, which accounts for half of the countrys total exports, saw exports expand 17.1% year-on-year in June. Moreover, the 3-month sum in exports reached USD 21.3 billion in June, which exceeded the USD 19.7 billion peak recorded in May 2008. Consensus Forecast panellists expect the external sector to continue to benefit from high copper prices and anticipate exports to grow a robust 17.1% this year. For 2012, the panel expects exports to grow 5.4%.

2.0

0.0 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11

Note: Monetary Policy Rate (TMP, Tasa de Poltica Monetaria) in %, eop. Source: Chile Central Bank (BCC).

Copper Price | USD per Tonne

12,000

10,000

8,000

6,000

4,000

2,000 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

Note: Cash seller and settlement price. Source: London Metal Exchange (LME).

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FOCUSECONOMICS
Economic Indicators | 2006- 2015
Annual Data Real Sector Population (million) GDP per capita (USD) GDP (USD bn) Economic Growth (GDP, annual var. in %) Total Consumption (annual variation in %) Private Consumption (annual var. in %) Government Consumption (ann. var. in %) Fixed Investment (annual variation in %) Industrial Manufacturing (annual var. in %) Supermarket Sales (annual variation in %) Unemployment (aop, % of active population) Fiscal Balance (% of GDP) Monetary and Financial Sector Money (annual variation of M1 in %) Inflation (CPI, annual variation in %) Inflation (Core, annual variation in %) Inflation (WPI, annual variation in %) Monetary Policy Rate (TPM in %, eop) Stock Market (variation of IGPA in %) Exchange Rate (CLP per USD, eop) Exchange Rate (CLP per USD, average) External Sector Current Account (% of GDP) Current Account (USD bn) Trade Balance (USD bn) Exports (USD bn) Imports (USD bn) Exports (annual variation in %) Imports (annual variation in %) International Reserves (USD bn) International Reserves (months of imports) External Debt (USD bn) External Debt (% of GDP) Quarterly Data Economic Growth (GDP, annual var. in %) Economic Growth (GDP, qoq s.a. var. in %) Total Consumption (annual variation in %) Fixed Investment (annual variation in %) Industrial Manufacturing (annual var. in %) Supermarket Sales (annual variation in %) Unemployment (eop, % of active population) CCS (IEE) Business Confid. Index Inflation (CPI, annual variation in %) Monetary Policy Rate (TPM in %, eop) Exchange Rate (CLP per USD, eop) Exchange Rate (CLP per USD, average) Current Account (USD bn) Trade Balance (USD bn) Exports (USD bn) Imports (USD bn) Monthly Data Economic Activity (IMACEC, annual var. in %) Industrial Manufacturing (annual var. in %) Unemployment (eop, % of active population) Consumer Confid. Index (50-point threshold) IMCE Business Confid. Index Inflation (CPI, mom variation in %) Inflation (CPI, annual variation in %) Exchange Rate (CLP per USD, eop) 2006 15.9 9,238 147 4.6 7.0 7.1 6.4 2.3 3.2 5.9 8.0 7.7 13.2 2.6 2.7 7.9 5.25 34.4 534 530 4.9 7.2 22.8 58.7 35.9 42.2 17.7 19.4 6.5 47.6 32.4 Q3 10 6.9 2.2 10.9 18.6 4.4 8.3 8.0 77.7 1.9 2.50 485 512 -0.1 3.7 18.5 14.8 Sep-10 6.6 3.0 8.0 53.8 60.6 0.40 1.9 485 2007 16.1 10,215 164 4.6 7.0 7.0 7.1 11.2 4.1 5.2 7.0 8.2 18.1 7.8 6.3 14.0 6.00 13.8 496 522 4.5 7.5 23.9 68.0 44.0 15.8 22.6 16.9 4.6 55.8 34.0 Q4 10 5.8 1.0 10.3 19.9 2.7 6.5 7.1 77.8 3.0 3.25 468 480 1.2 4.4 19.8 15.4 Oct-10 5.0 1.7 7.6 56.5 60.2 0.10 2.0 492

Chile

July 2011

2008 16.3 10,483 171 3.7 3.9 4.5 0.5 19.4 0.2 0.9 7.8 4.3 6.7 7.1 8.6 22.7 8.25 -19.6 629 522 -1.9 -3.3 8.5 66.3 57.7 -2.5 31.1 23.2 4.8 64.8 37.9 Q1 11 9.8 1.3 11.6 19.3 11.7 6.5 7.3 73.4 3.4 4.00 482 482 0.7 4.4 20.0 15.7 Nov-10 6.3 2.5 7.1 53.7 60.4 0.07 2.5 486

2009 16.5 9,776 161 -1.7 1.9 0.9 7.5 -15.9 -6.7 5.1 9.6 -4.5 22.9 -1.4 -1.1 -14.9 0.50 46.9 506 560 1.6 2.6 14.1 54.0 39.9 -18.5 -30.9 25.4 7.6 74.0 45.9 Q2 11 6.1 7.5 12.7 7.1 6.4 7.5 68.8 3.4 5.12 471 469 0.1 3.7 20.3 16.5 Dec-10 5.9 3.8 7.1 52.2 56.8 0.12 3.0 468

2010 16.7 12,184 203 5.2 9.3 10.4 3.3 18.8 0.6 8.3 8.2 -0.4 20.6 3.0 2.5 3.5 3.25 38.2 468 510 1.9 3.8 15.9 71.0 55.2 31.5 38.3 27.9 6.1 86.7 42.6 Q3 11 5.1 6.5 15.0 4.0 5.8 7.6 3.5 5.52 470 474 0.0 3.4 20.8 17.2 Jan-11 6.8 3.7 7.3 51.7 62.7 0.28 2.7 483

2011 16.9 13,117 222 6.4 7.8 15.0 6.4 6.2 7.4 1.0 4.2 5.85 475 474 0.4 0.9 16.1 83.2 67.1 17.1 21.7 38.8 6.9 91.3 41.2 Q4 11 4.9 5.3 12.8 4.1 4.1 7.2 4.2 5.85 475 473 -0.2 4.2 22.0 17.6 Feb-11 6.9 1.9 7.3 46.9 63.0 0.21 2.7 476

2012 17.1 13,771 236 5.0 5.6 10.2 5.0 5.8 7.3 0.7 3.3 5.91 496 485 -0.3 -0.7 14.6 87.7 73.1 5.4 8.9 40.0 6.6 96.5 40.9 Q1 12 4.8 5.9 11.5 4.8 5.4 7.4 3.5 5.84 480 477 0.5 3.3 20.4 17.1 Mar-11 15.4 30.9 7.3 46.7 60.9 0.77 3.4 482

2013 17.3 14,287 248 5.0 5.5 9.4 3.9 5.7 7.2 0.7 3.1 5.75 503 500 -2.0 -4.9 7.2 91.2 79.1 4.0 8.1 36.3 5.5 97.5 39.4 Q2 12 5.1 5.6 9.4 4.6 5.3 7.6 3.5 5.86 486 483 -0.1 2.9 20.9 18.0 Apr-11 6.3 8.8 7.0 46.0 62.3 0.32 3.2 460

2014 17.5 14,741 259 4.8 5.3 7.7 3.8 5.8 7.2 0.9 3.1 5.58 529 516 -2.6 -6.8 5.9 94.9 84.9 4.1 7.3 37.0 5.2 103.8 40.1 Q3 12 4.4 5.3 8.7 4.5 5.2 7.5 3.3 5.90 492 489 0.1 3.2 21.5 18.3 May-11 7.3 9.7 7.2 47.2 60.1 0.40 3.3 467

2015 17.8 15,154 269 4.8 5.3 7.7 3.8 5.9 7.2 0.8 3.1 5.70 540 534 -2.3 -6.1 4.2 99.0 90.2 4.3 6.3 37.6 5.0 115.8 43.0 Q4 12 4.8 4.7 7.4 4.8 4.9 7.2 3.3 5.91 496 494 -0.4 3.3 22.3 19.0 Jun-11 44.1 60.5 0.17 3.4 471

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FOCUSECONOMICS
Real Sector | Gross Domestic Product
1 | Real GDP | 1990-2015 | % variation
16
Chile Latin America World

Chile

July 2011

2 | Real GDP | Q1 08-Q4 12 | % var.

10
Chile Latin America World

Real GDP growth in %

12

5 8

4 0 0

-4 1990 1995 2000 2005 2010 2015

-5 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12

3 | GDP 2011 | evolution of forecasts

8

4 | GDP 2012 | evolution of forecasts

7
Maximum Consensus Minimum

4
Maximum Consensus Minimum

2 Feb May Aug Nov Feb May

3 Feb May Aug Nov Feb May

5 | Consumption | % variation
16

6 | Investment | % variation
30

Individual Forecasts Banchile Inversiones Barclays Capital BBVA BICE Inversiones BofA Merrill Lynch Cmara Comercio Santiago Celfin Capital Citigroup Credit Suisse Deutsche Bank Econsult Goldman Sachs HSBC Inversiones Security Ita JPMorgan Nomura RBC Santander GBM UBS Summary Minimum Maximum Median Consensus History 30 days ago 60 days ago 90 days ago Additional Forecasts Central Bank (Jun. 2011) IMF (Jun. 2011) OECD (May 2011)

2011 6.5 6.4 6.2 6.4 6.3 6.6 6.5 6.3 6.4 6.2 6.0 6.6 6.0 7.0 6.2 6.5 6.5 6.3 6.5 6.3 6.0 7.0 6.4 6.4 6.3 6.2 6.1 6.0-7.0 6.2 6.5

2012 4.7 4.5 5.1 5.2 5.0 5.4 4.8 5.3 5.0 5.5 5.0 5.4 5.0 4.5 4.0 5.0 5.0 5.2 5.1 4.0 5.5 5.0 5.0 5.0 5.1 5.2 5.0 5.1

12 15 8 0 4 -15 0
Chile Chile Latin America Latin America

Notes and sources

General: Long-term chart period from 1990 to 2015 unless otherwise stated. All real sector data are from the National Statistical Institute (INE, Instituto Nacional de Estadsticas), Ministry of Finance (Ministerio de Hacienda) and Central Bank (BCC, Banco Central de Chile). See below for details. Forecasts based on LatinFocus Consensus Forecast.
2005 2010 2015

-4 1990 1995 2000 2005 2010 2015

-30 1990 1995 2000

7 | Consumption | evolution of fcst

8
2011 2012

8 | Investment | evolution of forecasts

20
2011 2012

7 15

6 10 5

4 Feb May Aug Nov Feb May

5 Feb May Aug Nov Feb May

1 GDP, annual variation in %. Source: INE. 2 Quarterly GDP (not seasonally adjusted), year-on-year variation in %. Source: INE. 3 GDP, evolution of 2011 forecasts during the last 18 months. 4 GDP, evolution of 2012 forecasts during the last 18 months. 5 Total consumption, annual variation in %. Source: BCC. 6 Gross fixed investment, annual variation in %. Source: BCC. 7 Total consumption, change in 2011 and 2012 forecasts during the last 18 months. 8 Gross fixed investment, change in 2011 and 2012 forecasts during the last 18 months. 9 Industrial manufacturing, annual variation in %. 1995-2015. Source: INE. 10 Unemployment, % of active population. Source: INE. 11 Balance of central government, % of GDP. 1995-2015. Source: Ministry of Finance. 12 Industrial manufacturing, evolution of 2011 and 2012 forecasts during the last 18 months. 13 Unemployment, evolution of 2011 and 2012 forecasts during the last 18 months. 14 Balance of non-financial public sector, evolution of 2011 and 2012 forecasts during the last 18 months.

LatinFocus Consensus Forecast

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FOCUSECONOMICS
Real Sector | Additional forecasts
Consumption % variation 2011 2012 8.2 5.5 8.5 4.3 6.7 5.1 6.8 4.9 5.9 4.4 7.9 6.5 7.0 5.4 7.1 5.9 8.5 6.0 7.8 6.7 7.3 5.9 8.8 5.2 9.8 9.0 6.0 7.7 6.3 5.9 9.8 7.8 7.8 7.3 7.1 7.0 4.3 6.7 5.7 5.6 5.6 5.6 5.6

Chile

July 2011

Individual Forecasts Banchile Inversiones Barclays Capital BBVA BICE Inversiones BofA Merrill Lynch Cmara Comercio Santiago Celfin Capital Citigroup Credit Suisse Deutsche Bank Econsult Goldman Sachs HSBC Inversiones Security Ita JPMorgan Nomura RBC Santander GBM UBS Summary Minimum Maximum Median Consensus History 30 days ago 60 days ago 90 days ago

Investment % variation 2011 2012 14.9 8.0 13.9 6.4 14.4 9.2 19.1 11.5 12.3 10.0 14.0 10.5 15.4 4.5 14.0 10.0 14.5 11.3 17.0 14.0 17.0 15.2 15.2 15.0 13.0 13.1 9.0 12.3 19.1 14.7 15.0 14.2 15.0 15.3 4.5 15.2 10.0 10.2 10.4 9.9 10.1

Manufacturing % variation 2011 2012 7.0 5.3 4.7 5.5 5.0 6.3 5.0 6.1 4.5 7.9 6.0 6.3 6.5 4.2 6.3 5.6 5.3 7.9 6.3 6.4 6.3 5.7 5.7 4.2 6.0 5.0 5.0 4.9 4.7 4.7

Unemployment % of active pop. 2011 2012 7.5 7.6 7.5 7.5 7.2 7.3 7.6 7.5 7.3 7.0 7.5 7.2 7.4 7.2 7.4 7.6 7.2 7.0 7.4 7.1 7.3 7.5 7.1 7.6 7.4 7.4 7.4 7.5 7.5 7.0 7.6 7.4 7.3 7.3 7.3 7.4

Fiscal Balance % of GDP 2011 2012 1.5 1.0 -0.8 -0.9 0.9 0.3 -0.5 0.0 0.1 0.4 1.9 2.4 1.4 0.5 -0.1 -0.5 0.4 0.2 2.8 2.0 1.0 1.0 3.5 -1.0 1.0 1.0 1.0 2.7 0.5 1.3 1.2 -1.0 3.5 1.0 1.0 0.8 0.5 0.5 -0.9 2.4 0.5 0.7 0.7 0.2 0.3

9 | Manufacturing | % variation
10

10 | Unemployment | % of active pop.

12
Chile Latin America

11 | Fiscal Balance | % of GDP

10

10

-5
Chile Latin America

-5
Chile Latin America World

-10 1995 2000 2005 2010 2015

4 1990 1995 2000 2005 2010 2015

-10 1995 2000 2005 2010 2015

12 | Manufacturing | evolution of frcst

7
2011 2012

13 | Unemployment | evolution of fcst

9.0
2011 2012

14 | Fiscal Balance | evolution of fcst

2
2011 2012

8.5 6 8.0 5 7.5

-1

4 Feb May Aug Nov Feb May

7.0 Feb May Aug Nov Feb May

-2 Feb May Aug Nov Feb May

LatinFocus Consensus Forecast

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FOCUSECONOMICS

Chile

July 2011

Monetary Sector | Inflation, Money, Wholesale Prices and Stock Market

15 | Inflation | 1995 - 2015 | in %
30
Chile Latin America

16 | Inflation | Q1 08-Q4 12 | in %
12
Chile Latin America

Inflation | annual variation of consumer price index in %

20

6
10

3
0

-10 1995 2000 2005 2010 2015

-3 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12

17 | Inflation 2011 | evolution of fcst

6
Maximum Consensus Minimum

18 | Inflation 2012 | evolution of fcst

4
Maximum Consensus Minimum

2
3

2 Feb May Aug Nov Feb May

1 Feb May Aug Nov Feb May

19 | Core and Wholes. Prices | % var.

30

20 | Money | % variation
60

Core Price Index WPI

20 40 10

Individual Forecasts Banchile Inversiones Barclays Capital BBVA BICE Inversiones BofA Merrill Lynch Cmara Comercio Santiago Celfin Capital Citigroup Credit Suisse Deutsche Bank Econsult Goldman Sachs HSBC Inversiones Security Ita JPMorgan Nomura RBC Santander GBM UBS Summary Minimum Maximum Median Consensus History 30 days ago 60 days ago 90 days ago Additional Forecasts Central Bank (Jun. 2011) IMF (Apr. 2011) OECD (May 2011)

2011 4.2 4.0 4.3 4.2 4.2 4.2 4.4 4.0 3.8 4.6 4.0 3.9 4.3 4.5 3.8 4.7 4.5 4.1 4.7 3.8 4.7 4.2 4.2 4.4 4.5 4.4 4.0 4.5 3.9

2012 3.3 3.1 3.3 3.5 3.0 3.5 2.8 3.0 3.5 3.5 3.2 3.0 3.5 3.2 3.6 3.0 3.3 3.6 2.8 3.6 3.3 3.3 3.3 3.2 3.3 3.0 3.2 3.9

0 20 -10

Notes and sources

General: Long-term chart period from 1995 to 2015 unless otherwise stated. All monetary sector data are from the National Statistical Institute (INE, Instituto Nacional de Estadsticas) and Central Bank (BCC, Banco Central de Chile). See below for details. OECD inflation forecast refers to annual average inflation. Forecasts based on LatinFocus Consensus Forecast. 15 Inflation, annual variation in consumer price index (CPI) in % (eop). Source: INE. 16 Quarterly inflation, year-on-year variation in consumer price index (CPI) in % (eop). Source: INE. 17 Inflation, evolution of 2011 inflation forecasts during the last 18 months. 18 Inflation, evolution of 2012 inflation forecasts during the last 18 months. 19 Core and wholesale price indices, annual variation in % (eop). 19982010. Source: INE. 20 Money, annual variation of M1 in %. 1990-2010. Source: BCC. 21 Emerging Markets Bond Index Plus (EMBI+), basis point spread over US treasuries. January 2000 until end of previous quarter. Source: JPMorgan. 22 Daily index levels. IGPA (ndice General de Precios de Acciones, Bolsa de Comercio de Santiago). Jan. 2008 until end of previous month.

-20 1998 2001 2004 2007 2010

0 1990 1995 2000 2005 2010

21 | Sovereign Spreads (EMBI+)

1,250 Chile 1,000 EMBI + Latin

22 | Stock Market | IGPA

25,000

20,000
750

500

15,000
250

0 2000 2002 2004 2006 2008 2010

10,000 Jan Jul Jan Jul Jan Jul Jan

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FOCUSECONOMICS
Monetary Sector | Interest Rate and Exchange Rate
23 | Interest Rate | 1995 - 2015 | in %
40
Chile Latin America

Chile

July 2011

24 | Interest Rate | Q1 08-Q4 12 | in %

15
Chile Latin America

Policy Interest Rate and Exchange Rate

Interest Rate Exchange Rate % CLP per USD 2011 2012 2011 2012 5.75 6.00 490 515 5.50 5.50 450 450 5.75 6.00 480 500 5.75 5.75 480 521 5.50 5.50 480 490 5.75 6.25 490 509 6.00 5.00 505 501 6.00 6.00 470 475 6.00 6.00 470 500 495 515 5.75 6.50 490 540 460 480 5.75 5.75 480 500 6.00 430 6.00 6.00 475 480 6.00 6.00 455 475 6.00 6.00 440 420 6.00 6.00 490 515 5.75 485 521 6.00 6.25 480 516 5.50 6.00 5.88 5.85 5.91 5.88 5.68 5.00 6.50 6.00 5.91 5.90 5.82 5.83 430 505 480 475 480 484 486 420 540 500 496 501 507 510

30 10

20 5 10

0 1995 2000 2005 2010 2015

0 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12

25 | Int. Rate 2011 | evolution of fcst

8
Maximum Consensus Minimum

26 | Int. Rate 2012 | evolution of fcst

7
Maximum Consensus Minimum

2 Feb May Aug Nov Feb May

4 Feb May Aug Nov Feb May

27 | Exchange Rate | CLP per USD

800

28 | Exchange Rate | CLP per USD

700

Individual Forecasts Banchile Inversiones Barclays Capital BBVA BICE Inversiones BofA Merrill Lynch Cmara Comercio Santiago Celfin Capital Citigroup Credit Suisse Deutsche Bank Econsult Goldman Sachs HSBC Inversiones Security Ita JPMorgan Nomura RBC Santander GBM UBS Summary Minimum Maximum Median Consensus History 30 days ago 60 days ago 90 days ago

700 600 600

500 500 400

Notes and sources

General: Long-term chart period from 1990 to 2015 unless otherwise stated. All monetary and external sector data are from the Central Bank (BCC, Banco Central de Chile). Forecasts based on LatinFocus Consensus Forecast. 23 Interest rate, Central Bank Monetary Policy Rate in % (eop). 19952015. 24 Quarterly interest rate, Central Bank Monetary Policy Rate in % (eop). 25 Interest rate, evolution of 2011 forecasts during the last 18 months. 26 Interest rate, evolution of 2012 forecasts during the last 18 months. 27 Exchange rate, CLP per USD (eop). 28 Quarterly exchange rate, CLP per USD (eop). 29 Exchange rate, evolution of 2011 forecast during the last 18 months. 30 Exchange rate, evolution of 2012 forecast during the last 18 months. 31 Current account balance as % of GDP. 32 Trade balance, imports and exports, in USD billion. 33 International reserves, months of imports. 34 Current account in USD billion, evolution of 2011 forecast during the last 18 months. 35 Exports, annual variation in %. 36 External debt as % of GDP.

300 1990 1995 2000 2005 2010 2015

400 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12

29 | CLP per USD 2011 | evol. of fcst

600

30 | CLP per USD 2012 | evol. of fcst

600

550

550

500

500

450
Maximum Consensus Minimum

450
Maximum Consensus Minimum

400 Feb May Aug Nov Feb May

400 Feb May Aug Nov Feb May

LatinFocus Consensus Forecast

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FOCUSECONOMICS

Chile

July 2011

External Sector | Current Account, Trade and International Reserves

Current Account USD bn 2011 2012 0.2 -0.7 3.2 12.6 -3.0 -10.6 2.3 1.6 0.8 1.5 0.5 0.0 3.2 3.0 1.0 -1.5 2.4 1.3 1.2 -0.3 -0.2 -1.8 3.2 -1.9 -8.3 1.6 -0.5 -1.4 -6.7 -3.0 3.2 1.0 0.9 1.3 0.4 -0.6 -10.6 12.6 -0.4 -0.7 -0.2 -1.8 -2.9 Trade Balance USD bn 2011 2012 16.6 13.0 22.2 34.6 12.9 3.8 15.7 15.4 17.2 14.8 18.8 11.4 12.0 11.4 15.8 17.0 15.5 15.9 18.0 14.0 16.0 14.0 14.5 12.8 14.8 13.2 15.7 13.2 10.1 15.0 12.0 19.1 19.6 12.0 22.2 15.7 16.1 16.1 15.8 14.5 3.8 34.6 13.6 14.6 14.1 13.8 12.8 Exports USD bn 2011 2012 83.6 87.5 92.2 108.7 81.2 79.2 84.6 84.2 84.5 88.8 85.9 90.9 82.2 90.4 83.6 89.2 81.5 88.6 82.0 83.0 81.0 85.0 83.9 88.9 80.5 83.6 85.3 77.9 84.2 80.0 78.0 84.3 92.6 77.9 92.2 83.6 83.2 82.0 80.5 78.9 78.0 108.7 88.0 87.7 86.2 84.7 82.9 Imports USD bn 2011 2012 67.0 74.5 70.0 74.1 68.3 75.4 68.8 68.8 67.3 74.0 67.0 79.5 70.2 79.0 67.8 72.2 66.0 72.6 64.0 69.0 65.0 71.0 69.4 76.2 65.7 70.4 69.6 64.7 74.1 65.0 66.0 65.2 73.0 64.0 70.2 67.0 67.1 65.9 64.7 64.1 66.0 79.5 73.5 73.1 72.1 70.9 70.9 Int. Reserves USD bn 2011 2012 38.7 39.0 39.9 39.9 37.9 37.5 40.3 41.5 35.0 33.0 33.0 41.8 46.6 40.0 42.0 40.0 41.0 39.8 39.8 38.0 38.6 39.3 41.2 40.3 39.7 39.7 33.0 41.8 39.8 38.8 37.9 36.7 36.2 33.0 46.6 39.8 40.0 39.2 38.2 38.0

Individual Forecasts Banchile Inversiones Barclays Capital BBVA BICE Inversiones BofA Merrill Lynch Cmara Comercio Santiago Celfin Capital Citigroup Credit Suisse Deutsche Bank Econsult Goldman Sachs HSBC Inversiones Security Ita JPMorgan Nomura RBC Santander GBM UBS Summary Minimum Maximum Median Consensus History 30 days ago 60 days ago 90 days ago

31 | Current Account | % of GDP

8
Chile Latin America

32 | Trade Balance | USD billion

120
Trade Balance Imports Exports

33 | Int. Reserves | months of imports

20
Chile Latin America

80

15

40

10

-4

-8 1990 1995 2000 2005 2010 2015

-40 1990 1995 2000 2005 2010 2015

0 1990 1995 2000 2005 2010 2015

34 | Current Account | evol. of fcst

3
2011 2012

35 | Exports | annual variation in %

60

36 | External Debt | % of GDP

80
Chile Latin America

60
0

30 40

-3

0 20

-6 Feb May Aug Nov Feb May

-30 1990 1995 2000 2005 2010 2015

0 1990 1995 2000 2005 2010 2015

LatinFocus Consensus Forecast

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FOCUSECONOMICS
Fact Sheet
General Data

Chile

July 2011

Chile in the Region

General Data Official name: Capital: Other cities:

Area (km2): Population (million, 2009 est.): Population density (per km2, 2009 est.) Population growth rate (%, 2009 est.): Life expectancy (years, 2009 est.): Illiteracy rate (%, 2002): Language: Measures: Time:

Republic of Chile Santiago (4.7 m) Valparaso (0.9 m) Concepcin (0.9 m) Puente Alto (0.5 m) 756,950 16.6 21.9 0.9 77.3 4.3 Spanish Metric system 4 hours behind GMT

Population | %-share in Latin America

Argentina 8%

GDP | %-share in Latin America

Chile 4% Other 21% Argentina 8%

Other 35% Brazil 34%

Mexico 22%

Chile 3%

Mexico 20%

Brazil 45%

Economic Infrastructure

Economic Structure
GDP by Sector | share in %
100% 2005
4.0 8.1 17.5

Telecommunication (2009) Telephones - main lines (per 100 inhabitants): Telephones - mobile cellular (per 100 inhabit.): Internet Users (per 100 inhabitants): Broadband Subscribers (per 100 inhabitants):
Energy (2007) Primary Energy Production (trillion Btu): Primary Energy Consumption (trillion Btu): Electricity Generation (billion kW-h): Electricity Consumption (billion kW-h): Oil Supply (thousand bpd): Oil Consumption (thousand bpd): CO2 Emmissions (million metric tons):

21.1 96.9 34.0 9.8

GDP by Expenditure | share in %

100%

2010
3.8 6.9 15.2 Agriculture

Mining

75%

75%
10.6 7.3 12.0 7.9 17.7 Commerce, restaurants and hotels Transport Manufacturing

50%

345 1,155 60.6 57.3 11.6 282 63.5

50%

16.5

25%

0%

25%
43.2 44.4

Financial services

-25%
Other

2004 2006 Private Consumption Investment

2008 2010 Government Consumption Net Exports

0%

Transportation (2009) Airports: Railways (km): Roadways (km): Chief Ports:

Political Data

357 5,481 80,505 Valparaso, Arica

Trade Structure
Primary markets | share in %
Latin America 18%

Other 17%

Latin America 33%

Other 17%

President: Last elections: Next elections: Central Bank President:

Long-term Foreign Currency Ratings

Sebastin Piera 17 January 2010 2013 Jos de Gregorio

China 12% Asia (ex China) 7% EU-27 12%

Exports

China 17%

Imports

USA 11%

USA 19%

Asia (ex China) 14%

EU-27 23%

Agency Moodys: S&P: Fitch Ratings:

Rating Aa3 A+ A+

Outlook Stable Positive Stable

Primary products | share in %

Capital goods 18%

Strengths Market oriented policy firmly anchored Structurally sound and prudent fiscal policy Free trade agreements with major economic areas Low import tariffs have created competitive industry

Weaknesses High dependence on copper exports Relatively small domestic market Privatisation of state-owned copper giant CODELCO not on agenda
Mining 59%

Industry 34%

Exports

Consumer goods 23%

Imports

Intermediat e goods 59%

Agriculture and fishing 7%

LatinFocus Consensus Forecast

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FOCUSECONOMICS
Economic Release Calendar
Date 12 July 12 July 12 July 13 July 14 July 14 July 14 July 15 July 18 July 18 July 20 July 20 July 20 July 21 July 21 July 22 July 22 July 25 July 26 July 26 July 26 July 27 July 28 July 28 July 29 July 29 July 1 August 1 August 1 August 2 August 2 August 3 August 3 August 4 August 5 August 5 August 5 August 5 August 6 August 8 August 8 August Country Brazil Mexico Uruguay Ecuador Argentina C hile C hile Peru Argentina Brazil Brazil Brazil Peru Argentina Mexico Argentina C olombia Ecuador Brazil C olombia Mexico Mexico Argentina C hile Brazil C olombia Mexico Paraguay Peru Brazil Uruguay Brazil Mexico Mexico Brazil C hile Ecuador Peru Venezuela C hile C hile Event May Retail Sales May Industrial Production May Industrial Production May Economic Activity June C onsumer Prices C entral Bank Meeting C entral Bank Meeting May Economic Activity (IMAE) May Economic Activity (EMAE) May Economic Activity (**) C entral Bank Meeting July C onsumer Prices (IPC A-15) June Unemployment July C onsumer C onfidence June Unemployment June Merchandise Trade May Industrial Production June C onsumer C onfidence July C onsumer C onfidence May Merchandise Trade June Merchandise Trade (*) May Economic Activity (IGAE) June Industrial Production June Unemployment July Business C onfidence (**) C entral Bank Meeting June Remittances July C onsumer Prices July C onsumer Prices June Industrial Production July C onsumer Prices June Producer Prices July Business C onfidence July C onsumer C onfidence July C onsumer Prices June Economic Activity (IMAC EC ) July C onsumer Prices June Merchandise Trade July C onsumer Prices July C onsumer Prices July Merchandise Trade

July 2011

Notes: (*) Preliminary estimate. (**) Approximate date.

LatinFocus Consensus Forecast

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FOCUSECONOMICS
Notes and Statements PUBLICATION NOTE Consensus forecasts are mean averages of projections of economic forecasters surveyed by FocusEconomics for our monthly publication. Quarterly averages may not correspond to the annual figures due to different forecast panels. The GDP-weighted averages for the regional aggregates refer to economies surveyed by FocusEconomics on a monthly basis, and include the following countries: Latin America (20 countries): Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela. Andean Community (4 countries): Bolivia, Colombia, Ecuador and Peru. Central America (7 countries): Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama, Mercosur (5 countries): Argentina, Brazil, Paraguay, Uruguay and Venezuela. Weights are based on market exchange rates and reflect the latest forecasts on GDP growth, inflation and exchange rates. COPYRIGHT NOTE

July 2011

Copyright 2011 FocusEconomics S.L. Duplication, reproduction, transmission, publication or redistribution in any form or by any means electronic, mechanical, or otherwise without prior written consent of FocusEconomics S.L. is strictly prohibited. Please cite source when quoting. All rights reserved under International Copyright Conventions. The LatinFocus Consensus Forecast is a monthly publication of FocusEconomics. Communications to the Editor or FocusEconomics in general should be addressed as follows: FocusEconomics S.L. Gran Via 657 E-08010 Barcelona Spain tel: +34 932 651 040 fax: +34 932 650 804 e-mail: info@focus-economics.com web: http://www.focus-economics.com

DISCLOSURE STATEMENT The LatinFocus Consensus Forecast (Forecast) is based on information obtained from sources believed to be reliable. FocusEconomics and the participating panellists (Information Providers) do not guarantee that the information supplied in the Forecast is accurate, complete or timely. The Information Providers do not make any warranties with regard to the results obtained from the Forecast. The Information Providers are not responsible for any errors or omissions, or for any injuries or damages resulting from the use of this information, including incidental and consequential damages. Recipients should not regard the Forecast as a substitute for the exercise of their own judgement. The recommendations made in the Forecast may be unsuitable for investors depending on their specific investment objectives and financial position. The Forecast has been prepared solely for informational purposes and is not a solicitation of any transaction or an offer to enter into any transaction. Any opinions expressed in this report are subject to change without notice and the Information Providers are under no obligation to update the information contained herein. LatinFocus Consensus Forecast

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July 2011

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