About our external scenario, incoming data show improved performance of exports across sectors (figure 9). Still, examining numbers of the first half, we foresee that the export volumes will contract during the year. However, by 2018 they should recover thanks to improvements in the world economy, which coupled with better prices increase our estimated 5  trade balance for next year. The low comparison base due to the Escondida mine strike downtime early this year will also result in higher mining exports in 2018. Thus, in 2018, the current account deficit should be lower than we expected in September, close to 1% of GDP, similar to our 2017 projection. At trend prices, the current account deficit remains at 2.6% on average in 2017-2018 (table 1). Aside from the scenario I have just described for domestic activity and spending, the convergence of inflation to the target also considers a mild depreciation of the real exchange rate that will cause it to converge from where it was at the closing of this Report to its longterm equilibrium within the projection horizon. The baseline scenario also contemplates that the prices of foods, particularly fresh fruits and vegetables, will return to their normal patterns, so their annual inflation will be rising over the course of 2018. About monetary policy, the Board estimates that in the baseline scenario the surprises that have pulled inflation down below expectations do not compromise the convergence of inflation to the target.
In the past few months, domestic activity has evolved as expected. The stronger external impulse has consolidated, with still favorable financial conditions, trading partners that, on average, are somewhat more dynamic and better terms of trade. Nonetheless, inflation has stayed below the forecasts of the September MP Report. Most of the difference is related to the more volatile items in the basket, as core inflation —which we  measure with the so-called CPIEFE1— is near expected levels. The projections that I will present to you in a moment assume that the convergence of inflation will take somewhat longer than we anticipated in the last MP Report. This considers the effect of the recent surprises and the evolution of the exchange rate up to the Report’s statistical cutoff. It also assumes that activity growth will gradually speed up its pace, from its bounded present levels to above potential in the second half of 2018, yielding the way to close the output gap that will help inflation to converge within the projection horizon. In any case, there are still significant risks surrounding the baseline scenario depicted in this MP Report. On the one hand, some sectors still lag behind in the recovery process, especially some relating to investment. On the other hand, a scenario in which the economy does not return to higher growth rates in the coming months, can affect the recovery of growth in the medium term.