Monthly Economic Update

Monthly Economic Update
June 30th, 2016
Nº 3
Patrons 2016
KEY EVENTS
The government has shelved plans
for a second labour bill to reinstate
key powers to unions after they were
blocked by the Constitutional Court.
Ministers blamed the lack of support
from opposition politicians needed to
obtain the required two-thirds majority
to change the constitution. Instead,
lawmakers have been asked to approve
with a presidential veto of the objected
clauses of the controversial legislation,
granting unions an exclusive right to
hold collective negotiations, so the
reform can be signed into law. But the
veto will also eliminate pro-business
measures included in the bill, i.e. lifting
the minimum quorum for collective
negotiations and allowing workers and
employers to agree on special working
hours.
Success...
Sponsors 2016
Jorge Burgos resigned as Interior
Minister on June 8th after a series of
run-ins with the rest of the government
on issues such as the creation of a new
constitution and the legalization of
abortion. President Michelle Bachelet
named another Christian Democrat,
Mario Fernandez, to the post.
In its latest Monetary Policy Report,
the Central Bank further reduced its
economic growth forecast for 2016
to 1.25%-2.00% from 1.25%-2.25%
previously.
On June 7th, Chile filed a legal suit
against Bolivia before the International
Court of Justice in The Hague over the
use of water from the Silala River, which
runs along the border between the two
countries. The move pre-empts legal
action threatened by Bolivian president
Evo Morales earlier this year over the
same issue. Water extracted from
the Silala is used in copper mines in
northern Chile.
LATEST FIGURES
The Chilean economy grew by 0.7% in
April, according to the Central Bank’s
Monthly Indicator of Economic Activity,
down from an average growth of 2.0%
in the first three months of the year. It
is the lowest monthly rate since growth
of just 0.2% in January this year. Mining
shrank by 5.8% while the rest of the
economy grew by 1.3%, led by services
and retail activity.
The drop in mining activity reflected
largely a drop in copper production,
which fell 8.2% in April to 432,277 tons,
as operations in central Chile were
impacted by torrential rains. Production
during the first four months of the year
… is possible with Leaders
Boyden was founded more than 60 years ago as a pioneer company in the industry, developing broad global experience in
the search of senior executive positions.
We are present in 40 countries with over 65 offices and have thus created contact networks that are essential for our work.
Boyden has a strong commitment with his clients and works under the best practices with ethics and responsibility.
We are your local partner, contact us.
Iquique: Simón Bolívar 202, of. 1102
Tel: (56 57) 2428592
Antofagasta: Arturo Prat Chacón 461, of. 2005
Tel: (56 55) 2224445
Santiago: Av. Kennedy 5454, of. 302, Vitacura
Tel: (56 2) 27510360
Puerto Montt: Av. Juan Soler Manfredini 11, of. 1303
Tel: (56 65) 2482744
For further information on your local partner, please visit us at www.boyden.com/chile
Monthly
Monthly Economic
Economic Update
Update
November 26th, 2014
June 30th, 2016
Nº 6
Nº 3
fell 4.7% to 1.83 million tons. Production of molybdenum,
Chile’s second most important mineral export, rose 37.9% to
19,121 tonnes over the same period.
Manufacturing output shrank 1.2% in April, according to
the National Statistics Institute (INE). The drop reflected
lower production of frozen salmon and trout, in the wake
of the summer algal bloom, while pulp output was affected
by scheduled maintenance shutdowns. This was partly
compensated by increased production of asphalt, potash and
steel balls for the mining industry.
Retail sales in Santiago rose by 8.4% in April, compared to
twelve months earlier. The increase was the sharpest in the
National Chamber of Commerce’s index since October 2013.
The chamber noted that increased sales of clothing and
footwear could be related to heavy rains in April.
Consumer-price inflation rose by 4.2% in May, unchanged
from April and up from 4.0% twelve months earlier. Inflation
was driven by higher prices for vegetables and other goods and
services, while the prices of electronic devices, particularly
computers, fell. Core inflation (which excludes fresh fruit and
vegetables and fuels) fell to 4.4%.
Business confidence fell in May, with the Monthly Indicator
of Business Confidence (IMCE) published by the ICARE
business organisation and the Adolfo Ibáñez University falling
to 41.72 points, from 43.32 points in April. Confidence in the
construction sector fell almost five points to 20.95, its lowest
level since February 2009.
Consumer confidence fell in May to 33.9 points, from 34.6
points in April, and marking its lowest level since August last
year, according to the Index of Economic Perception (IPEC),
produced by GfK Adimark. Those surveyed were less positive
on all areas of the economy, particularly the outlook for the
next twelve months.
In May, Central Bank president Rodrigo Vergara warned
that unemployment was likely to rise above 7% this year
as the economy cools. The three-month rolling-average
unemployment rate rose to 6.4% in April, up from 6.3% in
March and 5.9% in February and from 6.1% in twelve months
Cámara Chileno Británica de Comercio A.G
Av. El Bosque Norte 0125, Las Condes
Teléfono: 2370 4106 / Fax: 2370 4164
info@britcham.cl / www.britcham.cl
earlier. Compared to the previous quarter, jobs were lost
in agriculture, hospitality and healthcare, while jobs were
created in retail, teaching, transport and storage, and public
administration.
Nominal wages fell 0.3% in April, compared to March,
according in INE’s Remunerations Index. Wages fell fastest
in retail and manufacturing, while rising in construction and
financial services. Over the last year, wages have risen by
5.3%.
The rate of fiscal spending rose by 7.2% in the first four
months of the year, while fiscal revenues grew by 8.4% in the
same period.
The Selective Share Price Index (IPSA) fell by 1.68% in May,
compared to April, and by 2.7% over the previous twelve
months. However, trading volumes in May rose to CLP 1.271
billion, up 12.4% from April.
In May, exports reached US$5.1 billion, up from US$5.0 billion
in the same month last year, while imports were unchanged
at US$4.6 billion, compared to twelve months earlier; as a
result, there was a monthly trade surplus of US$745 million,
as compared to US$689 million twelve months earlier.
In May, the peso fell against the dollar, with the exchange
rate averaging 682 pesos/dollar as compared to 670 pesos/
dollar in April. The dollar traded as high as 694 pesos/dollar
in mid-May before pulling back to the low 680s, a level it has
held into June.
In June, the board of the Central Bank agreed to maintain
its nominal benchmark interest rate at 3.50% for a sixth
consecutive month. Although second quarter activity and
demand weak and confidence levels remain pessimistic, the
bank noted that employment remains at relatively low levels.
The bank said it expects to announce further rate rises in
order to bring inflation back within its 2%-4% target range.
Economic Report Committee:
Peter Lynch, Regional Audit Manager, BHP Billiton Chile
Tom Azzopardi, Journalist
Guillermo Tagle, Partner & Executive Director, IM Trust & CO Holdings S.A.
Leslie Hemery, Partner, PwC Chile
Richard Cheney, Director, British Chilean Chamber of Commerce
Greg Holland, General Manager, British Chilean Chamber of Commerce