Search

 

Cablegate: Chile: Economic Highlights Week of December 1

VZCZCXYZ0003
OO RUEHWEB

DE RUEHSG #1065/01 3441041
ZNR UUUUU ZZH
O 091041Z DEC 08
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4038
INFO RUCNMER/MERCOSUR COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEKJCS/SECDEF WASHDC
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SANTIAGO 001065

STATE PLEASE PASS TO USTR KATE DUCKWORTH
STATE PLEASE PASS TO FEDERAL RESERVE TOM CONNORS
TREASURY FOR SSENICH
COMMERCE FOR KMANN

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN ETRD EINV ECIN PGOV PREL CI

SUBJECT: CHILE: ECONOMIC HIGHLIGHTS WEEK OF DECEMBER 1

REFS: SANTIAGO 1044 AND PREVIOUS

1. SUMMARY: This continues a series of regular updates on major
developments in Chile's economy since the acceleration of global
financial turmoil. By week's end, December 5, copper prices hit a
four-year low, the peso fell against the dollar, and the stock
market was down. The indicator of monthly economic activity fell to
2.7% in October. Inflation fell to 8.9% in November (higher than
expected). Lending to consumers fell in October. The Economist
predicts investment in Chile in 2009 will fall for the first time
since 1997. Private banks received loan guarantees for small- and
medium-size enterprises. The GOC halted its Sovereign Wealth Fund
investment diversification plan. END SUMMARY.

Copper Prices Hit Lowest Point In Four Years
---------------------------------------------

2. On the London Metals Exchange, copper closed at $1.38/pound on
December 5, down almost 15% from its close on November 28
($1.62/pound). The day's price was the lowest in four years.

Chilean Peso Loses Ground Against Dollar
----------------------------------------

3. On December 5, the exchange rate closed at 674.6 Chilean Pesos to
1 U.S. Dollar (a depreciation of 2% from the close on November 28).


Stock Market Closes Down For The Week
-------------------------------------

4. The IPSA closed at 2306.26 points on December 5, down almost 4%
on the close of November 28.

Economic Activity Slows In October
----------------------------------

5. The Central Bank released key economic indicators December 4,
which show the Chilean economy slowed in October. The indicator of
monthly economic activity (Imacec) grew by only 2.7%, when compared
with October 2007. This is also a decrease when compared with
activity in September 2008 (5.6%).

Inflation Falls In November
---------------------------

6. According to the Central Bank's December 4 report, the Consumer
Price Index decreased in November to 8.9% (from 9.9% in October) a
drop of 0.1%. The decrease was less than expected and due almost
entirely to a fall in fuel prices, which dropped by 14.5% in
November.

Decrease In Lending To Consumers In October
-------------------------------------------

7. According to Chile's Association of Banks (Abif), lending to
consumers fell by 0.98% in October. The Association estimates
consumer lending will remain flat during 2008. Home loans,
commercial loans, and external loans increased in October and the
Association estimates the three areas will grow by 10% in 2008.

The Economist Projects Fall In Investment
-----------------------------------------

8. During the week, the Economist Intelligence Unit published an
analysis of the Chilean economy, which predicts the economy will
grow by only 1% in 2009. Investment is also forecast to fall by
5.5% in Chile, for the first time since 1997.

Banks Receive Loan Guarantees for SMEs
--------------------------------------

9. During the last week of November, Chile's state-sponsored loan
guarantee agency (Fogape) auctioned approximately $93 million in
loan guarantees for small- to medium-size enterprises (SMEs). 18
private banks participated in the auction, which is designed to
boost lending to SMEs. Small- and medium-size enterprises have been
disproportionately impacted by the global financial turmoil.

Halt In Sovereign Wealth Fund Diversification
--------------------------------------------- -

10. During its November meeting, the Financing Committee for Chile's
two Sovereign Wealth Funds (SWFs) recommended against proceeding
with a plan to diversify 35% of the Funds' investments. The
Committee cited concerns stemming from the global financial crisis.
Currently, the SWFs are held mainly in sovereign bonds and money
market funds. The GOC had planned to diversify into riskier
investments. The SWFs are valued at approximately $21 billion (as
of October 31). According to the Committee, none of the Funds'
investments have been exposed to institutions suffering from
liquidity or solvency issues.
URBAN

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO: