The economy surprised in May and encouraged a forecast of 4% for GDP this year despite the external storm

In a real surprise, the increase of 4.9% recorded by the monthly indicator of Economic Activity (Imacec) in May, compared to the same month of 2017. The result, reported yesterday by the Central Bank, not only exceeded the 4% in which was located the average of the market projections, but even the most optimistic estimates

Auspicious, the figure was based on the progress of 6 , 9% of the mining activity and 4.7% in the non-mining case, strongly influenced by

In the market, the data that overlapped even last May had a day of less work and it There were entities that improved their forecasts for the expansion of gross domestic product (GDP) for this year and the next. BBVA, for example, has improved its figures for 2018 from 3.5% to a calculation of about 4%, "which would mark the biggest expansion in Latin American countries."

For the chief economist of Itaú, Miguel Ricaurte, the surprise of the fifth month responded to the expectation of a "more modest performance of mining and development. services, which ultimately pushed the business. "

The senior economist of BICE Inversiones, Antonio Acha, added that predictions prevailed skepticism, "primarily by the labor market figures", the risk that the expert points out for the second half of l & # 39; year.

And the second half?

As already verified by the survey conducted by DF, on the market The possibility that the economy maintains the rate of expansion in the second half is not excluded, although that is not the case. there is obviously no consensus.

In fact, there are optimistic agents. "Since the beginning of the year, we believe that in 2018 growth will be greater than 4%," said Econsult chief economist Valentina Rosselli. And even if the speed goes down, he adds, "it's still consistent" with a rate of more than 4%.

Ricaurte estimates that the probability of seeing rates between 3% and 4% "is high".

he does not doubt the deceleration of what comes and anticipates more limited figures between 3% and 3.5%.

He also enrolls with a 3% variation over the next six months, Scotiabank's chief economist, Sierra Benjamín, who warns that the surprise would come from the services side, " that are growing faster than expected "and specifically target businesses," which accelerate even before the reactivation of investment and the accompanying in almost "

Despite this, he has maintained the estimate at 3.7% by the end of 2018.

As estimated by one market sector, the second half of the year presents different challenges: for comparison, the effects of the trade war that should be between the United States and China and the possible acceleration of interest rate hikes by the Federal Reserve.

"There is a set of external turbulence that can harm at a stage in the cycle in which expectations are decisive ", Said Sierra.

In this context, Banchile raised to 3.7% its forecast of GDP for 2019 influenced by the non-mining sector and reaffirmed its forecast of 3.9% for 2018, based mainly on the projected stability of consumption and a marked increase in gross capital formation, which would increase by almost 8%.

Compensation at a turning point

Some reliefs played a key role in the income level of the Chileans in May. The nominal compensation index (IR) has improved by 3.2% compared to the same month of 2017, which has slowed down the slowdown observed since last August, according to the National Institute of statistics (INE).
In real terms, the indicator recorded an increase of 1.1%, accumulating a decline of 0.8% since the beginning of the year.
During this same period, the cost of labor (ICMO) increased In 12 months, the total number of hours per worker decreased by 0.7%, while ordinary and extraordinary hours decreased by 0.4% and 6.5%, respectively.
Ordinary pay per ordinary average hour was $ 4,661. For women, this value was $ 4,330 and for men $ 4,946. The gender gap in ordinary pay per ordinary hour was -12.5%.

The government demands caution and attention for the labor market

With joy, but without triumph. So they received in the government the unexpected increase of Imacec in May. The first to react was President Sebastián Piñera himself, who said he was "very happy" but immediately expressed his concern about the 5.1% growth in the economy since his arrival at La Moneda. After presenting the public integrity project, the president expressed hope that growth "will translate into better jobs, better wages and better opportunities and for that we must do everything. the efforts needed to facilitate, promote and encourage the creation of jobs in the country. "

In the same vein, Finance Minister Felipe Larraín stressed his satisfaction," because it is not a month or two months, However, he warned: "We are happy, but we do not Let's not sing victory either, we are just starting to get up, it's a race, we need to continue to work for this growth to be sustainable and provide us with opportunities and jobs for the Chileans, "he said. he noticed in the global economy "with a decline in the price of copper, interest rate increases in major economies and the beginning of the trade war."

In this he has baderted that for the second half "the basics of comparison become more demanding," but confident that "the economy will continue to grow but rates will be a little lower.

Chile lifts the list of tariff-subject products

– What is the program of the executive before the start of the trade war? [19659028] – Our field of study is to raise all lists (of products) that will have tariff restrictions and on this basis badyze the opportunities and also the risks that arise from these impositions. the factors to determine where the opportunities are and where the risks are.For example, high-end products with an appellation such as wine will continue to be purchased even with higher tariffs because they have a demand rather inelastic.There are also seasonal themes, because our fresh fruits do not compete in the same American season, so a door is not necessarily opened by the void left by the output of the production North American
– How do you see that the offer will be adjusted in the markets in which we participate?
– This is another of the questions we follow. because a larger stock of US products could saturate a third market, such as pork, which will have restrictions in China, and it is necessary to see where he will put it. An alternative would be to be South Korea, where we have a significant presence and, therefore, we must be attentive to how to replace these markets and face increased competition.
– What is the level of coordination with export guilds?
– We are activating our 54 trade offices to report on all the advances and potential impacts, and we are also very close to the private sector to understand how to deal with the new dynamic, as adjustments will occur. We have contacted unions such as Sofofa and the fruit exporters to know the market position of these exporters and how they see these contingencies. With pork exporters, we have badyzed the opportunities and threats, and it is important to see the other markets with which we are negotiating trade openings and bigger quotas like the European Union.
– This turbulence has revealed weaknesses in the regulation of trade. In the world, how would these disagreements on tariffs be met?
– Our position at the WTO, at APEC and at OECD is that we are already at the point where it is time to act, to take definitions. Those who believe in free trade feel that they are working on a reform of the WTO so that we can really resolve issues as important as dispute resolution or subsidy negotiations. In that sense, we are going to express ourselves and have invited us to a meeting with similar countries like Canada to discuss the issues of the future of trade. The coming months will be critical in the way the great powers and also the emerging world manage to sit down and definitively define the course of the WTO's destiny.