Central Bank of Chile foresees a contraction of 7.5%

The Central Bank of Chile predicts for 2020 a contraction in the local budget of between 5.5% and 7.5%, which represents the largest drop in gross domestic product (GDP) in the last 35 years.

According to what the issuer explains, “this contraction has already occurred, taking into account the falls in activity in March (-3.5%) and April (-14.1%) and it is anticipated that those of May and June will have been superior due to the extension of quarantines in the metropolitan region and to the main areas of the Valparaíso region.”

As indicated by the bank, the central scenario assumes that the recovery will begin to occur during the third quarter, with a relaxation of the quarantines that will allow a gradual reopening of the economy, thus allowing a gradual improvement in activity and the labor market.

In the Monetary Policy Report (IPOM), it is anticipated that by 2021 the recovery will be between 4.75% and 6.25%, while in 2022 growth will be between 3% and 4%.

The lender asserted that “the economy will begin to recover in the second part of 2020 and it is expected that only by the middle of 2022 will the activity levels of the third quarter of 2019 be equated” and added that interest rates remain at 0.5% historical minimum.

K.Villarroel

Source: bancaynegocios