December 2021. After the well-known electoral results, economic data show a high GDP growth, which would exceed 10% in the year, strongly influenced by an increase in private consumption and, within this, in durable goods. Despite the fact that the exchange rate surpassed the $900 per dollar barrier, the current account shows a strong deficit, which has only been financed by capital repatriations by institutions and the government.

Prices, on the other hand, have not given any respite, and their year-on-year variation remains above 5%, after the surprising monthly records of September and October, which exceeded 1% versus the previous month, respectively. The increases continue to be led by the Transportation and Food division, although an acceleration has been seen in Housing and Home Improvement, in addition to Recreation and Culture and Restaurants and Hotels. The feared third wave did not represent a greater risk, due to the high percentage of vaccination in the country (exceeding 90% of the target population) and the lower stress of the national hospital system.

The Central Bank, on the other hand, in its recent IPoM, again increased growth estimates for the current year, but cut those for next year. The inflationary scenario is becoming worrisome, which was reflected in the 150 bp increments of the instance rate, which would close the year at 2.25%, with imminent increases of 50 bp in each of the upcoming meetings, mainly due to the de-anchoring of expectations and some second round effects. Credit support programs have ended, while efforts have been concentrated on avoiding a break in the payments chain, mainly due to the lack of liquidity in the fixed income market. Term premiums on market structures have risen an additional 100 bps higher than seen in August, pushing bond valuations to levels not seen since the subprime crisis.

In this context, the president of the Issuer Institute, Mario Marcel, has been summoned to the Constitution Commission, in the context of the discussion of a fifth withdrawal from the pension funds, added to a third "withdrawal" from the Life Annuities. In view of the desolate panorama exposed by Marcel, the president of the commission described the exposition as "a campaign of terror by the economic elite, which once again does not care about ordinary people". When asked about the increases in mortgage and consumer credit rates, he informed that an investigative commission would be created and the FNE would be contacted to evaluate possible collusion in this market. Furthermore, in a nod to the Constitutional Convention, he expressed doubts about the commitment of the Central Bank to social demands, proposing that the removal of the monetary authorities be evaluated and that their election be popular. Ah, but it was very important for it to remain autonomous. He dismissed the rise of the dollar, since "Chileans buy in pesos, not in dollars".

The heat wave facing the country is once again pitting communities against farmers, due to the water deficit of recent years. In this regard, a cross-cutting group of deputies presented a bill against climate change, which they hope will prevent the increase in temperatures. The national soccer team, on the other hand, after failing to obtain any points in September's triple date, continues to hope for a place in the World Cup in Qatar.

Nathan Pincheira

Chief Economist of Fynsa