Chile: Busy week ahead. Strong activity and modest deflation expected

Chile: Busy week ahead. Strong activity and modest deflation expected.

CHILE

A busy week ahead; strong activity (October) and modest deflation (November) expected. The calendar starts on Wednesday with the release of the October economic activity report. The forecast shows expectations for a strong reading based on available evidence on different economic sectors. Thus, we expect the monthly real GDP proxy to have advanced 6.2% y/y in October. We also look for a modest expansion in sequential terms. The median estimate from the Bloomberg survey, meanwhile, looks for a flat monthly reading and a slightly lower 6.0% y/y gain.

On Friday, we expect consumer prices to have inched down modestly in November. After an upside surprise in October, consumer price inflation is expected to have dived into negative terrain in November. The m/m decline is estimated to be modest, though. We look for a negative print smaller than 0.1% in absolute terms. If the forecast materializes, the y/y inflation rate would have declined to 2.5% last month.

Below the headline, the main downward push should have come from gasoline prices that are estimated to have declined a whopping 4% m/m. Food price pressures are also expected to have abated in November.

The merchandise trade balance is expected to have bounced in November. Based on partial evidence for the first three weeks of the month, the merchandise trade surplus is expected to have increased to USD 0.6bn in November. If the forecast materializes, the trade surplus would have increased to USD 4.7bn on a 12-month sum basis.