SANTIAGO, Nov 29 (Reuters) - Chile’s economy should grow slightly more than 2 percent next year despite a worsening external situation and the weak price of the country’s top export, copper, Central Bank President Rodrigo Vergara told a local newspaper.
“We are growing around 2 percent now and for next year we expect a bit more, but not much more,” Vergara said in an interview with El Mercurio newspaper published on Sunday.
“In September, we had expected growth between 2.5 percent and 3.5 percent next year with downwards risks and some of the risks have materialized.”
Growth decelerated to a five-year annual low of 1.9 percent in 2014. The central bank chief said it was now unlikely the economy would rebound swiftly from this slowdown in the second half of this year as originally forecast.
On the contrary, the recovery would be slow given that the external situation had worsened for Chile with copper prices sliding to multi-year lows and the economy in top trade partner China slowing.
Vergara said it was difficult to imagine the price of copper would reach $2.45 per pound in 2016, as the bank had forecast in September.
“We believe it is much more complex now to reach this number although we do believe that the fall in the price off copper is temporary,” he said. “We do not believe that 2 dollars is a balanced value.”
Vergara said he believed the Chilean peso should not weaken much more after depreciating to its lowest level against the dollar in more than 12 years, boosting inflation to above the central bank’s target range of 2 to 4 percent.
“As the exchange rate stabilizes, inflation should give way,” Vergara said, adding that inflation would likely remain above 4 percent for the first half of next year, slowing to around 3 percent in 2017.
Vergara said the central bank was monitoring for the possible impact on Chilean business of the arrest of the controlling shareholder of Brazilian investment bank Grupo BTG Pactual SA.
“We should not forget though that BTG in Chile is a Chilean bank, separate from its parent company and small,” he said. (Reporting by Antonio de la Jara; Writing by Sarah Marsh; Editing by Alison Williams)