BIS central bankers’ speeches  5  Figure 1  World output (*) (index, second quarter 2007=100)  Unemployment rate (*) (percent)  120  120 10  10  110  110  8  8  6  6  4  4  2  2  100  100  90  90  07  08  09  10  08  Jul. 09  Jul. 10  Jul. Emerging economies  Developed economies  (1) Regions weighted at PPP. Developed economies include: Australia, Canada, the Eurozone, Japan, Sweden, Switzerland, the U.K. and the U.S. Emerging economies includes: Argentina, Brazil, Chile, China, Colombia, Hong Kong, India Indonesia, Israel, Malaysia, Mexico, the Philippines, Saudi Arabia, South Korea, Russia, Singapore, Taiwan, Thailand and Venezuela. (2) Regions weighted at PPP. Developed economies include: Canada, the Eurozone, Japan, the U.K. and the U.S. Emerging economies include: Brazil, Mexico, South Korea, Thailand and Taiwan. Sources: Central Bank of Chile based on Bloomberg, OECD and each country's statistics offices, and U.S. Federal Reserve.
In multilateral terms, the appreciation has also been smaller, because of the dollar’s loss in value with respect to other currencies; even some currencies of Chile’s trading partners have shown higher bilateral appreciations than the peso (figure 10). Among the long-lasting elements underlying this appreciation, we may highlight improved terms of trade, a better cyclical position of the Chilean economy compared with developed ones, the accumulated increase in the ratio of public expenditure to GDP and the reduction in our net debtor position relative to the rest of the world. In Chile, net capital flows have been limited. We have seen capital inflows as direct foreign investment and placement of bonds abroad by Chilean firms. But at the same time, these inflows have been offset by outflows due to higher investments abroad by residents, including pension funds. Considering the level of the nominal exchange rate and currency parities prevailing at the statistical closing of this IPoM, the real exchange rate (RER) is around its minimum consistent with its long-term fundamentals. The baseline scenario of this IPoM uses as a working assumption that the peso will post a moderate real depreciation into the long-term. Projections also use the assumption that the monetary stimulus will continue to be gradually withdrawn at a pace comparable to what can be inferred from the various expectations surveys (figure 11). The Board hereby states that this will depend, in any case, on the unfolding of domestic and external macroeconomic conditions.