Chile’s central bank says economy is recovering, but some sectors are lagging

Chile’s central bank says economy is recovering, but some sectors are lagging
Chile’s central bank says economy is recovering, but some sectors are lagging

Chile’s central bank said in a report released Tuesday that the economy is recovering overall, although some sectors are lagging and the depth of financial markets has yet to return to levels seen before the coronavirus pandemic.

The bank said the South American country’s trade, construction and real estate sectors had fallen behind schedule, which it said increased the possibility of defaults.

“The external scenario remains the main Source of risks for local financial stability,” according to the bank. At the same time, the finances of local businesses and individuals have generally improved, she said in a biannual stability report.

The monetary authority added that in the consumer sector, although more people are failing to meet their mortgage payments, this remains at a relatively low level.

Overall, household finances have stabilized thanks to rising incomes and easing financial burdens, the report said.

The document states that external macroeconomic risks underline the importance of strengthening the resilience of local agents and the national financial market.

It also highlights risks related to US monetary policy uncertainty and rising global debt.

Chile’s inflation rate, which reached a 30-year high in 2022, moved closer to the bank’s 3% target, prompting the latter to cut its interest rate by benchmark of 11.25% to its current level of 6.5%.

The report comes a day after the central bank’s board voted unanimously to keep capital requirements for risky assets at the same level as last May, a move intended to strengthen resilience of the economy in the face of serious crisis scenarios.

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