This 2016 Article IV Consultation highlights that GDP growth in Chile has been weak, with activity slowing in October. However, conditions are in place for the economy to recover. After expanding by a moderate 1.7 percent in 2016, growth is forecast to increase to 2 percent in 2017. Faster growth in main regional partners and more stable copper prices are expected to lift exports and investment. The recovery is, however, projected to be gradual, held back by slow wage and job growth and still low business confidence. The financial sector appears healthy. Banks' profitability is declining, but capital buffers are adequate and nonperforming loan rates are low.

Abstract

This 2016 Article IV Consultation highlights that GDP growth in Chile has been weak, with activity slowing in October. However, conditions are in place for the economy to recover. After expanding by a moderate 1.7 percent in 2016, growth is forecast to increase to 2 percent in 2017. Faster growth in main regional partners and more stable copper prices are expected to lift exports and investment. The recovery is, however, projected to be gradual, held back by slow wage and job growth and still low business confidence. The financial sector appears healthy. Banks' profitability is declining, but capital buffers are adequate and nonperforming loan rates are low.

Fund Relations

(As of April 30, 2015)

Exchange Rate System

Chile has accepted the obligations of Article VIII, Sections 2, 3, and 4 and maintains an exchange rate system free of restrictions on the making of payments and transfers for current international transactions. Chile has a floating exchange rate system.

Statistical Issues

(As of July 1, 2015)

Assessment of Data Adequacy for Surveillance

General: Data provision is adequate for surveillance. The National Institute of Statistics (INE) regularly publishes a full range of economic and financial data. The Central Bank of Chile (CBC) also publishes comprehensive macroeconomic and financial data. The Ministry of Finance publishes fiscal data.

Key publicly accessible websites for macroeconomic data and analysis are:

National Institute of Statistics: http://www.ine.cl/

Central Bank of Chile: http://www.bcentral.cl/

Ministry of Finance: http://www.minhda.cl/

Recent Developments: The Central Bank started to publish housing real estate price data in 2014, and a new series on external debt at market values in 2015 which allows better monitoring and identification of risks. The National Institute of Statistics (INE) has revised the basket and methodology of the Consumer Price Index (CPI) including to address some limitations in the clothing sub-index.

Data Standards and Quality

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The CBC uses the standardized report forms (SRFs) to report monthly data for the central bank, other depository corporations (ODCs), other financial corporations (OFCs), and monetary aggregates. However, data for the ODCs exclude savings and credit cooperatives and OFCs exclude investment funds, general funds, housing funds, foreign capital investment funds, factoring societies, leasing companies, and financial auxiliaries.

The CBC reports all core and 7 of 28 encouraged financial soundness indicators on a monthly basis.

Chile: Table of Common Indicators Required for Surveillance

(As of July 1, 2015)

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1/

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

2/

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

3/

Foreign, domestic bank, and domestic nonbank financing.

4/

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

5/

Including currency and maturity composition.

6/

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

7/

Reflects the assessment provided in the data ROSC, (published September 17, 2007 and based on the findings of the mission that took place during April 18-May2, 2007) for the dataset corresponding to the variable in Each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

8/

Same as footnote 7, except referring to international standards concerning source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

9/

Same as footnote 8, except referring to international standards concerning source data, statistical techniques, assessment and validation of source data, assessment and validation of intermediate data and statistical outputs, and revision studies.

10/

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

World Bank—Fund Country-Level Work Program under JMAP

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Delivery date refers to the Board date in lending projects, to delivery to client in case of AAA and to Grant effective date in case of RETF. Technical assistance includes Reimbursable Advisory Services (RAS).

1

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.