The Monetary Policy Report  The evolution of the macroeconomic scenario, in Chile and around the world, continues to be driven by the spread of the Covid-19 and the containment measures needed to protect the health of the population. The information at hand shows that, after a sharp fall at the beginning of the second quarter, in recent months the Chilean economy has shown signs of stabilization, combining an incipient improvement in some sectors and deterioration at the margin in others. This stabilization has responded to the evolution of sanitary restrictions, the adaptation of various sectors to new operating conditions and the boost from economic policies. The economic impact of the pandemic, however, is very significant and recovery will pose major challenges for public policies, institutions, and economic agents. The magnitude of this challenge is especially evident in the high number of people and businesses whose source of income has been disrupted. Reversing the loss of jobs, the fall in household income and the deterioration in consumption, together with responding to the financing needs of businesses, avoiding bankruptcies and enabling them to recover, are the greatest challenges for economic policy at this stage. As I will show later, based on known activity data and short-term perspectives, we estimate that GDP will end 2020 with a fall of between -4.5 and -5.5%, which compares to the -5.5 to -7.5% range estimated in the June MP Report and which implies a significant recovery in the second half of the year.
Annual average dynamics of unit labour costs in the second quarter of 2007 in CEE accounted to 8 per cent and in the group of Baltic and Balkan states the figure was over two times higher. This shows that sooner or later (rather sooner) enterprises will stop cutting their profit margins and will be forced to pass growing operational costs on consumers. 3. Productivity growth. We live in a global knowledge economy, which is driven by innovation – technological, business-process or customer related. The crucial factor to succeed in the global knowledge economy is the country’s ability to develop intellectual capital. Only those who understand the importance of innovations for growth will thrive and prosper in the coming decades. Unfortunately, CEE region lags badly behind the leaders in terms of its current and future ability to generate innovation. One of indicators measuring current ability to innovate is the number of researchers. In the mid-1990s CEE-4 (the Czech Republic, Hungary, Poland and Slovakia) and NIEs regions had similar number of researchers per million people, while two years ago NIEs had almost twice as many persons employed in R&D per million people in comparison with CEE-4. Future knowledge potential of particular country or region can be measured by tertiary enrolment ratio. Tertiary enrolment ratio in the CEE-4 countries improved to 50 percent in 2004, but still remains well below 62 percent in the EU-15 and 82 percent in the United States.