Output, meanwhile, grew 5.7 percent y-o-y in the third quarter of 2012, flat from the previous quarter, but more than expected. The Economic Expectations Survey (EES) of August – available at the closing of the previous Monetary Policy Report – forecast 4.6 percent growth for said quarter. The greater increase was due to better performance in general. However, output’s velocity of expansion dropped from 8.3 to 5.7 percent annualized. In the baseline scenario, the Board estimates that GDP will grow 5.5 percent this year. This projection is higher than the ceiling we estimated in September, with a similar revision as has been made in private forecasts. Still, both our forecasts and private ones have experienced sustained upward revisions in the past year (figure 2). On the domestic spending side, third quarter growth (i.e. 8.0 percent y-o-y) largely surpassed second-quarter figures, however swollen by some specific factors. While every component of expenditure posted higher increases, the large increase in machinery and equipment investment is worth noting: 19.9 percent y-o-y. The acceleration of domestic spending amplified the negative current account balance, which in the third quarter went to 2.9 percent of the GDP accumulated in the last year. The baseline scenario assumes that the deficit will end the year 2012 at 3.8 percent of GDP, exceeding September’s forecast of 3.2 percent. Meanwhile, the national financial system has operated normally in a context of strong investment and favorable external credit conditions.
Household credit has continued to grow  2  BIS central bankers’ speeches  in tandem with disposable income, although the increase in loans by non-bank suppliers – with a higher penetration in lower-income households – has been smaller than in previous periods. Corporate debt has grown somewhat above GDP, driven by strong local banking credit and external financing via bonds, in a context of favorable financing conditions in international markets. In turn, the banking system keeps robust indicators, with capital significantly above regulatory levels, a more diversified external funding base, and a stable liquidity position. Toward 2013, the Board estimates that GDP growth will be within the range of 4.25 to 5.25 percent. This range is above the one foreseen in September. In this scenario, domestic demand will increase 5.7 percent y-o-y, further amplifying the current account deficit to 4.6 percent of GDP. This projection supposes that macroeconomic conditions facing the Chilean economy will remain fairly unchanged in the near future, and that the economy will grow in line with trend rates, which the Board continues to estimate around 5 percent (table 1). Internationally, the baseline scenario foresees that in 2013 and 2014 the world economy and Chile’s trading partners will grow by averages of 3.6% and 3.8%, respectively, not far from those of 2011–2012. Important differences remain between the performances of the developed world and the emerging world. The recession in the Eurozone has settled and is expected to last some more time.