A run-through of the main macroeconomic variables shows a healthy situation. Second quarter GDP grew 5,5% yoy (constant prices) boosted by internal demand. After a strong upturn in unemployment rate in 2009 (reaching 11,5%) it has returned to previous levels (current 6,6%) keeping retail sales growing at 5% yoy. On public finances, after closing 2010 with a budget deficit of -4,5%, government made some movement in order to restore balance reducing budget deficit on 2011 to -0,4%. Meanwhile, debt/GBP ratio is currently on 9,2%.
The weakest part of its economy is related with exports. Chilean economy is a leading exporter of commodities and raw materials, emphasizing on base metals (mainly copper) and food (mainly fish) and global deceleration iniciated in the summer of 2011 has slowed exports and thus, has reduced its trade surplus. So, the economy will suffer if global deceleration worsens, though we think it will be able to overcome a negative environment in a better way than other latin-american economies due to its balanced situation.
From a technical point of view, after the strong depreciation recorded after Lehman´s collapse, Chilean peso has appreciated till 460 CPL/USD though it has not recovered pre-crisis levels. On a seminal basis graph, the currency is fluctuating between 460-520 CLP/USD. In the long run, CPL tends to depreciate against USD, but if price breaks down 450-460 CLP/USD barrier, probability of cancelling the historical depreciation increases (and it could be reinforced when breaking down the upward trend that we can observe on RSI indicator.
In the short run, we think that we could see a rebound from 470 CPL/USD to 520 CPL/USD based on support level plotted in the graph (dotted black line) and also on technical indicators as RSI (upward trend) or stochastic (oversold). 520 USD/CPL also match up with 200-day moving average and the medium term downtrend line.