| Abstract: |
This presentation discusses risks and tensions that have emerged in the global economy due to the ongoing process of world economic recovery and its implications on the Chilean economy. It reviews the decoupling of emerging economies from developed ones in terms of growth, the difficulties endured by developed economies to boost their feeble recovery, Europe’s public debt issues, the high commodity prices and symptoms of overheating in some emerging markets. This scenario has pushed emerging economies’ exchange rates to their lowest levels of the past decade. It stands out that, although an important step to change the composition of world demand, it has created tensions and in some cases has prompted the adoption of policies to mitigate exchange rate adjustments. Capital inflows have added pressure to the exchange rate discussion in some emerging economies and might favor an unhealthy increase in lending and incubate financial fragilities. Chile’s last forex intervention is mentioned. The differences in capital flows between Chile and other countries and episodes of substantial flows into emerging economies are described, emphasizing that large capital outflows from Chile have created a negative net balance. It is also suggested that the current level of the neutral MPR is probably lower than previous estimates, influenced by the low international interest rates. |
Banco Central de Chile