The correction with respect to March responds to the negative developments in the external scenario in recent weeks, particularly as the escalation of the trade conflict has led to greater risk aversion, causing, among other effects, a global appreciation of the dollar and a reduction in most commodity prices, including copper. The latter is especially relevant due to its effect on the terms of trade (ToT). Thus, for the period 2019-2021 we assume that the ToT will accumulate an increase of 0.6%, which compares with the increase of 1% expected in March (Figure 10). This projection considers a copper price whose annual averages will be closer to 280 cents per pound between 2019 and 2021, and not around 290 cents per pound, as we estimated in March. As for global growth, the baseline scenario adjusts slightly the expected expansion of our trading partners during this year, to 3.2% (3.3% in March). In this correction, a much lower performance of Latin America becomes important. We still estimate that China will grow around 6% and the US somewhat above 2% (table 4). Although our trading partners’ growth is adjusted only slightly, there has been a marked deterioration in world trade growth, which is captured in the less favorable evolution that is expected for Chilean exports (Figure 11). In the baseline scenario, we project that these will lose dynamism, particularly in 2019, due to the difficulties encountered by some exporting sectors. Also because of the lower copper output, which will impact metal shipments.
I am fully confident that in our next monetary meetings, in the coming months, we will decide, in a pragmatic approach, about the best evolution after March of all our available tools: QE, TLTRO and forward guidance on interest rates. And we have many options open regarding the size and length of instruments like our APP, excluding either a sudden stop of its contribution to our accommodative policy in March, or the continuation of the same contribution forever. Second, we in Europe share a large single market. It is a tremendous asset which belongs to us all, the 27. It is no coincidence that access to the single market lies at the heart of the Brexit debate. We cannot prejudge the outcome of the future negotiations, but we can be sure of one consistency principle: access to the single market must continue to go hand-in-hand with strict acceptance of all its rules. There can be no cherry-picking or free-riding. And we must obviously preserve the single European trade policy, if we want to exist in the trade negotiations to come worldwide. Third, we share a common social model (slide 2) which combines high standards of public service and relatively low levels of inequality – much lower than in American society. And this has been achieved in a market economy.