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Fundamentals of theFundamentals of the

Chilean EconomyChilean Economy

Central Bank of ChileCentral Bank of ChileOctober 2002October 2002

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Fundamentals of the ChileanFundamentals of the ChileanEconomyEconomy

MacroeconomicMacroeconomicandand

Financial StabilityFinancial Stability

External SectorExternal Sector

StrengthStrength

MicroeconomicMicroeconomic

& Institutional& Institutional

StrengthStrength

Financial SystemFinancial System

StrengthStrength

MonetaryMonetary

StrengthStrengthFiscalFiscal

StrengthStrength

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Monetary StrengthMonetary Strength

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Chile: Nominal Exchange Rate(CLP/USD)

250250

350350

450450

550550

650650

750750

9090 9191 9292 9393 9494 9595 9696 9797 9898 9999 0000 0101 0202

spot

central

parity

ceiling

floor

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Chile: Monetary Policy InterestChile: Monetary Policy InterestRateRate(%)(%)

* Before June 1995: PRBC 90 days rate

Nominal Int. RateCPI-adjusted Int. Rate

CPI-adjusted MPR

Overnight Rate *

-0,5

1,5

3,5

5,5

7,5

9,5

11,5

90 91 92 93 94 95 96 97 98 99 00 01 02

2

3,

4,

5,

6,

7,8,

9,

10

11

12

Nominal MPR

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Chile: Real Exchange Rate(index, 1986=100)

7070

8080

9090

100100

110110

120120

8686 8787 8888 8989 9090 9191 9292 9393 9494 9595 9696 9797 9898 9999 0000 0101 0202

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Chile: Long-Term Int. Rate: CentralChile: Long-Term Int. Rate: CentralBank InstrumentsBank Instruments (%)(%) CPI-adjustedCPI-adjusted

2

3

4

5

6

7

8

9

10

Sept-

02

Oct-9

2

Abr-9

3

Oct-9

3

Abr-9

4

Oct-9

4

Abr-9

5

Oct-9

5

Abr-9

6

Oct-9

6

Abr-9

7

Oct-9

7

Abr-9

8

Oct-9

8

Abr-9

9

Oct-9

9

Abr-0

0

Oct-0

0

Abr-0

1

Oct-0

1

Abr-0

2

PRC 8 years

PRC 20 years

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Fiscal StrengthFiscal Strength

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Fiscal Balance: Average 1992-2001

(% GDP)

-10-10

-8-8

-6-6

-4-4

-2-2

00

22

Argent.Argent.

BrazilBrazil

Chile

ColombiaColombia

Czech Rep.Czech Rep.

HungaryHungary

IsraelIsrael

KoreaKorea

MalaysiaMalaysia

MexicoMexico

PeruPeru

PolandPoland

ThailanThailan

Latin America CountriesLatin America Countries

Other Emerging EconomiesOther Emerging Economies

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Financial SystemFinancial SystemStrengthStrength

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ArgentinaArgentinaThailandThailand

South KoreaSouth KoreaJapanJapan

MalaysiaMalaysiaMexicoMexicoBrazilBrazilChileChile

Hong KongHong KongItalyItaly

AustraliaAustraliaGermanyGermany

FranceFranceUKUKUSUS

SpainSpainNetherlandsNetherlands

(15, amount 76)(15, amount 76)

Ranking of Banking StrengthRanking of Banking Strength(Source: Moodys, july 2002)(Source: Moodys, july 2002)

stronger

less strong

Chile: Financial Savings by Institutiona

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Chile: Financial Savings by InstitutionaInvestors(% GDP)

00

2020

4040

6060

8080

100100

19941994 19951995 19961996 19971997 19981998 19991999 20002000 20012001

pension funds

insurance companies

mutual funds

Chile: Domestic Corporate Bond

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Chile: Domestic Corporate BondMarket(USD billions)

(total outstanding)(total outstanding) (Issuance(Issuance

00

11

22

33

44

55

66

77

19941994 19951995 19961996 19971997 19981998 19991999 20002000 20012001

0,00,0

0,50,5

1,01,0

1,51,5

2,02,0

2,52,5

3,03,0

outstanding

issuance

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External Sector StrengthExternal Sector Strength

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Chile: Total Exports VolumeChile: Total Exports Volume(index 1990=100)(index 1990=100)

00

5050

100100

150150

200200

250250

300300

6060 6565 7070 7575 8080 8585 9090 9595 0000 00

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Chile: Exports by SectorChile: Exports by Sector(% total exports)(% total exports)

1960196020012001

Mining

Industry

Agriculture

19801980

Chile: Distribution of MerchandiseChile: Distribution of Merchandise

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Chile: Distribution of MerchandiseChile: Distribution of MerchandiseExportsExports(January-August 2002)(January-August 2002)

USA: 20%USA: 20%

Latam: 2Latam: 2

EU: 20%EU: 20%

UK: 5%UK: 5%

China: 7%China: 7%

Japan: 11%Japan: 11%

Rest of Asia: 12%Rest of Asia: 12%

Others: 4%Others: 4%

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Chile: Current Account Deficit(% GDP)

00

11

22

33

44

55

66

9090 9191 9292 9393 9494 9595 9696 9797 9898 9999 0000 0101 0202 0303 0404

forecast

Chile: Cumulative Investment

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Chile: Cumulative InvestmentAbroad(% GDP)

45

50