Chile’s Oct economist survey shows improving confidence in growth
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The latest survey showed that economists continue to upgrade their 2012 GDP growth expectations, reflecting that the economy may have a strong fourth quarter. Current 2012 full year growth expectations are at 5.1%, continuing a steady upward trend since the 4.0% reading in January. The survey also showed the opposite trend for the 2013 GDP expectations, whose projections started the year at 5.0% and are now hovering around 4.6%.
Another interesting data point from the survey is the expectation of appreciation of the Chilean Peso. The graph above shows the two month forward expectation of the Chilean Peso vs the US Dollar. For reference, the line shows the exchange rate at the time. The key takeaway from the graph is that currently economists expect the exchange rate to remain between 480 and 485 Chilean Pesos per Dollar, with any extremes (as the one in June) expected to revert shortly after. The last few months, paired with the increased GDP growth expectations from the previous graph, make a strong point for further appreciation.
The takeaway from the indicators shown above are that if the Chilean Peso remains rangebound between 480-485 Chilean Pesos per Dollar and GDP growth picks up, then investments such as iShares MSCI Chile Index Fund (ECH) will likely benefit in the short term.