Scandal, they're going to turn our lives into a freak show
Economics: Growth has trended downwards throughout the year. The situation regarding domestic demand is even less auspicious than that of total GDP. Moreover, last year, exports (measured in real terms) experienced their first yearly contraction since 2009. The devaluation of the peso has not affected exports positively as much as it has induced a contraction in imports.
The low rates of growth for domestic demand have been driven by virtually nil growth in investment in fixed capital. Investment in machinery and equipment fell for the third year in a row, while construction continues to grow, driven by a mini boom in the housing sector. In 2015 household consumption continued to grow, but at increasingly lower rates. However, retail sales have displayed a recovery path ever since November of last year. Most recent data might be signaling that the first quarter of 2016 will not be as bad as the last of 2015.
The March Inflation Report reveals a very distinctly dovish attitude. Forecast were revised down. At the same time, the Central Bank continues to emphasize the need for additional hikes in the MPR. We are inclined to rule it out for this year. The Board will recognize sooner than later that there is scant need for additional monetary tightening.
The unemployment rate continues at historical lows. The commerce sector has been leading job creation. Apparently this sector is playing a "buffer" role, absorbing workers who cannot find jobs of better quality. The unemployment rate in the January-March quarter will remain low. The deterioration in the aggregate figures is more likely to begin in April.
For the last two years, inflation has almost always remained above the Central Bank’s 2-4% inflation target range. During the first three months of the year, the exchange rate appreciated and wages are decelerating and the labor market is showing clear signs of deterioration. If these trends continue in coming months, we should see inflation coming down slowly.
Politics: Corruption scandals and accusations of wrongdoing have affected government and opposition parties, the president’s family, and major Chilean institutions such as the football association and the Church. Even foreign corruption scandals, such as the Panama Papers and the Brazilian political funding scandal has affected high profile Chileans. Polls show that Chileans feel that the country is more corrupt than in the past. Yet a close look reveals little evidence to support this. More like is that increased transparency and accountability, as well as more public scrutiny, has led to a more educated and informed public that demands more from it public officials and institutions.
After several years of relentless discussions, the shareholders of the Santiago Stock Exchange finally approved amendments of its statutes to allow for the demutualization in Chile´s main exchange. This decision was not an easy one. Until just a couple of months ago, most shareholders were against demutualization. In the end, shareholders changed their views because of increased regional and global competition from other exchanges, which was eroding its profits. What is next? There will be an increase in the number of shares of the exchange, turning the original 48 shares into 48,000,000 shares.
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