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CHILE.

CHILE

 % Change (In millions US $)
 Interest
Date CPI M1 Rate (%) Imports Exports Trade Bal

 1990 27.3 30.0 48.2 7,068.0 8,328.0 1,260.0
 1991 18.7 24.0 28.3 6,989.0 8,561.0 1,572.0
 1992 12.7 15.0 23.8 9,250.0 9,900.0 650.0
 1993 12.2 19.0 24.1 10,181.0 9,202.0 -979.0
 1994 8.9 14.0 20.3 10,879.0 11,539.0 660.0
 1995 8.2 19.4 18.1 14,655.0 16,137.0 1,481.0
 1996 6.6 13.0 19.2 16,499.0 15,353.0 -1,147.0
 1997 6.0 20.0 15.6 18,218.0 16,923.0 -1,295.0
 1998 4.7 -7.6 18.5 17,391.0 14,895.0 -2,496.0
 1999 2.3 18.4 12.0 13,951.0 15,616.0 1,665.0
Jan -0.3 2.4 1.3 1,225.0 1,275.0 50.0
Feb 0.1 0.9 1.0 1,001.0 1,174.0 173.0
Mar 0.6 -1.4 1.0 1,094.0 1,491.0 397.0
Apr 0.4 -0.7 1.3 986.0 1,372.0 386.0
May 0.1 1.7 1.2 1,167.0 1,291.0 125.0
Jun 0.1 2.0 1.0 1,206.0 1,240.0 33.0
Jul 0.1 -2.7 0.8 1,088.0 1,192.0 104.0
Aug 0.2 -2.1 0.8 1,294.0 1,165.0 -129.0
Sep 0.2 7.0 0.8 1,282.0 1,321.0 38.0
Oct 0.4 -0.9 0.9 1,268.0 1,309.0 42.0
Nov 0.2 2.2 1.1 1,168.0 1,329.0 161.0
Dec 0.3 11.1 1.0 1,172.0 1,457.0 285.0
 2000 4.6 2.7 13.5 16,724.0 18,159.0 1,435.0
Jan 0.2 0.3 1.0 1,284.0 1,510.0 226.0
Feb 0.6 -2.3 1.0 1,205.0 1,490.0 285.0
Mar 0.7 -4.4 1.3 1,482.0 1,844.0 362.0
Apr 0.5 -1.1 1.3 1,364.0 1,316.0 -48.0
May 0.2 -1.2 1.2 1,566.0 1,753.0 187.0
Jun 0.2 0.7 1.1 1,331.0 1,269.0 -62.0
Jul 0.1 -1.6 1.1 1,458.0 1,552.0 94.0
Aug 0.3 0.0 1.0 1,491.0 1,635.0 144.0
Sep 0.6 3.0 1.2 1,398.0 1,260.0 -138.0
Oct 0.6 -1.7 1.4 1,543.0 1,672.0 129.0
Nov 0.3 1.1 1.3 1,450.0 1,408.0 -42.0
Dec 0.1 10.7 1.2 1,152.0 1,450.0 298.0
 2001 4.0 4.0 13.5 18,000.0 19,500.0 1,500.0
Jan 0.3 -0.2 1.1 1,516.0 1,732.0 216.0
Feb -0.3 -1.1 1.0 1,269.0 1,396.0 127.0
Mar 0.5 6.6 0.8 1,496.0 1,675.0 179.0
Apr 0.5 1.3 1.1 1,280.0 1,693.0 413.0
May 0.4 -1.6 1.1 1,361.0 1,544.0 183.0
Jun 0.1 3.5 1.0
Column
Number 1 2 3 4 5 6

 (In millions US $)

 Current Exchange Rate
Date Acct Bal Reserves Off/Par

 1990 -1,100.0 2,700.0 327.0 328.0
 1991 -800.0 6,639.0 375.0 378.0
 1992 -1,200.0 9,009.0 382.0 382.0
 1993 -2,500.0 9,759.0 431.0 434.0
 1994 -1,500.0 13,446.0 404.0 401.0
 1995 147.0 14,805.0 407.0 407.0
 1996 -2,918.0 15,474.0 425.0 425.0
 1997 -4,057.0 17,841.0 440.0 440.0
 1998 -4,144.0 15,992.0 474.0 473.0
 1999 -700.0 14,710.0 497.0 538.0
Jan -- 15,439.0 483.0 489.0
Feb -- 15,002.0 499.0 502.0
Mar 380.0 14,898.0 484.0 485.0
Apr -- 15,706.0 484.0 482.0
May -- 16,589.0 486.0 485.0
Jun 50.0 15,014.0 489.0 502.0
Jul -- 15,005.0 491.0 517.0
Aug -- 14,917.0 490.0 513.0
Sep -467.0 14,615.0 491.0 525.0
Oct -- 14,564.0 491.0 538.0
Nov -- 14,443.0 494.0 544.0
Dec -42.0 14,710.0 497.0 538.0
 2000 -989.0 14,741.0 525.0 575.0
Jan 14,239.0 499.0 520.0
Feb 14,320.0 504.0 513.0
Mar 473.0 14,497.0 506.0 504.0
Apr 14,338.0 508.0 508.0
May 14,687.0 513.0 522.0
Jun -622.0 14,597.0 511.0 530.0
Jul 14,578.0 513.0 543.0
Aug 14,379.0 517.0 551.0
Sep -533.0 14,157.0 521.0 566.0
Oct 14,262.0 524.0 568.0
Nov 14,220.0 525.0 575.0
Dec -307.0 14,741.0 525.0 575.0
 2001 -1,000.0 15,000.0 550.0 620.0
Jan 14,545.0 525.0 571.0
Feb 14,522.0 527.0 563.0
Mar 112.0 14,545.0 530.0 588.0
Apr 14,329.0 533.0 599.0
May 14,422.0 535.0 604.0
Jun 14,295.0 538.0 616.0
Column
Number 7 8 9 10

FOOTNOTES BY COLUMN: Annual figures for 2001 are projections. 1-2:
Annual figures represent January-December increase. 3:
Short term monthly rates for local currency loans. Annual figures
are monthly rates expressed in annual terms. 4 9: Annual figures
represent values at year end.

SOURCES BY COLUMN: As of third quarter 1999, all figures are from
the Informe Economico y Financiero of the Banco Central.
Prior to that, they were from: 1. Instituto Nacional de Estadistica,
Boletin Mensual. 2: Banco Central. 3: Indicadores de Estrategia. 4-9:
Banco Central.


FINANCIAL OUTLOOK

* Accumulated inflation for the first half reached 1.5%. Central bank president Carlos Massad predicts annual inflation will stay below 4% and has forecast a year-end-figure of 3.4%. Both new forecasts are significantly lower than the first-quarter estimates of 4.5%. In June, price hikes in the food, communications and health sectors pushed up inflation the most, but notably reduced prices of fuel and clothing helped keep it down.

* The reference interest rate was cut for the fifth time this year on June 12, down 25 basis points from 3.75% to 3.5%. This is the lowest rate in 15 years, and reflects an attempt to reactivate consumer demand. Officials said the decision was a response to slower-than-expected economic growth, rising unemployment and the absence of inflationary pressures. Jose de Gregorio, ex minister of mining, energy and economy, was named to the bank's board of directors to replace Pablo Pinera.

* The trade surplus dropped from $413 million in April to $183 million in May, marking the end of the fruit export season. Between January and May, the value of copper exports rose 2.4% while the value of Chile's principal non-copper exports fell by 6%. In this same period, the total value of Chilean exports rose 1.2% while imports grew 0.4%, mainly affected by capital goods. However, export values may fall during the rest of the year, if copper prices fall as forecast.

* The current account balance managed to shake off the constant deficit seen in 2000 and ended the first quarter with a surplus of $112 million.

* Reserves fell by $127 million in June, mainly because many of the currencies held by the bank depreciated against the dollar in the second quarter. Given the peso's unexpected weakening and the country's general economic slowdown, it is difficult to say whether reserves will reach $16 million at year-end, as predicted by financial analysts during the first quarter.

* The peso fell by nearly 9% in the first half, with some unofficial retail rates reaching P631 :$1. The constant depreciation is due to dropping interest rates in Chile and the US, and the complicated economic situation facing Argentina and Brazil. Authorities say they will take steps to support the peso if necessary.

ECONOMY MONITOR

* Growth Outlook: The central bank on July 3 reduced its official 2001 growth estimate from 4.3% to 4%, citing the difficult situation facing the world economy and the fact that many countries have lowered their growth expectations. Growth in Latin America is only expected to reach 2% this year, and some business sectors don't expect Chile's economy to fare much better. Even though Chile's economy thus far this year has staggered along, most analysts expect a pickup after the second quarter, with growth rising to 4.5% and 5% in the third and fourth quarters, respectively. The official forecast for 2002 growth is 5.6%.

* Political Factors: The business sector remains uneasy about the way President Ricardo Lagos has led the country, and his overall approval rating has dropped six points this year to 48%, having fallen 18 points since he took office, according to a survey by the Center for Public Studies (CEP). However, the survey was done just days after several incidents rocked the country, including highway takeovers by Mapuche indigenous groups in the south and student upheavals demanding higher funding, thus generating overall public opinion that the government is not addressing many basic needs. The country is still in shock over the supreme court's July 9 ruling that General Augusto Pinochet is unfit to stand trial, though right-wingers in the business sector are relieved because they feel conclusion of the issue will create a more stable business environment.

* Fiscal Situation: The fiscal deficit is now estimated to rise from 0.1% to 0.5% of CDP this year. When Chile's budget was set out in October 2000, it assumed copper prices of $0.88 to calculate 2001 fiscal income. But the finance ministry has readjusted the 2001 average copper price to $0.80.

* Major Sectors: World copper prices dropped below $0.70 for the first time in 25 years, which will hit Chile's most important export sector hard. Between January and April 2001, foreign investment totaled $2.7 billion, up 239% year-on-year. The main recipients were transportation and communications (44%), electricity, gas and water (28%), mining (9%) and industry (8%). Between January and May, retail sales grew just 0.1%, indicating a serious lull in consumer demand. In this same period, supermarket sales fell 0.5%, but industrial exports increased 6.3%.. The construction sector was expected to grow 5% this year, but in June the estimate was cut to 3%. This news was sweetened somewhat by a 40% increase in real estate sales in May. The same month, industrial production grew 0.6% and industrial sales 8.7% year-on-year.

* Employment: Unemployment grew to 9.6% by May, with forecasts of double digits during the harsh winter months of the third quarter. The labor ministry announced in early July that the government has already created 34,000 of the 60,000 jobs it promised to create by September 2001. The government has finally passed a law to create unemployment insurance, and on July 6 the labor ministry and foreign investment committee launched a road show to promote the bidding process, which will be open to both domestic and foreign investors in the banking, fund management and insurance sectors. A single contract will be awarded to manage the program.

* Stock Market: The IPSA stock index finished the second quarter at 107.8 points; well above the first quarter's 97.9 points. First-half growth was 7.8%, mainly due to capital market reform measures and lower interest rates. Chile's principal stockbrokers expect the IPSA to grow 8%-10% this year, finishing at 118 points.

COMPANY MONITOR

* US pharmaceutical firm Ivax acquired 99.9% of Chile's top pharmaceutical LabChile in late June and is expected to acquire the additional 0.1% shortly. The deal is structured as 80% local shares and 20% ADRs.

* Metro SA, the state-owned subway company that operates three lines in Santiago, has announced a $1 billion plan, to be finished in 2005, to double the length of subway lines from 40 to 80 km by extending existing lines.

* US-based ALS, which entered the market in December 2000 by taking over second-largest generator Gener, said it will invest $1-2 billion over the next three to five years, mostly construction of thermal power plants.

* Spanish financial group Banco Santander Central Hispano (BSCH) opened in late May its Latin American technological center Altec, choosing Santiago as the home base. Altec will develop, design and manage the information systems of BSCH's 17 regional banking subsidiaries. BSCH chose Chile because of its political stability, advanced telecom infrastructure and highly qualified human resources.

* Spanish construction company ONE, which last year won a $87 million contract to finish the 220 km Santiago-Los Vilos highway, announced it would invest more than $500 million in Chilean infrastructure projects over the next two years. The company paid $60.4 million for Endesa's 60% stake in the Infraestructura 2000 consortium, which operates the 108 km Autopista del Sol highway linking Santiago and San Antonio. It is currently building the 90 km highway from Santiago to Los Andes.

* State-owned fuel company Enap announced in early May a $630 million joint venture with Swiss ABB to construct a petrochemical plant in the southern city of Punta Arenas. The plant will produce 250,000 tons of polyethylene annually. Enap said it will increase investments this year by 30% to $200 million to seek out new sources of oil.
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Title Annotation:economic indicators
Publication:America's Insider
Article Type:Illustration
Geographic Code:3CHIL
Date:Aug 3, 2001
Words:2418
Previous Article:BRAZIL.
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