The share of GDP in quarantined areas has moved from 11% to 52% in the same period. Page 1 of 3  Central Bank of Chile June 2020  11. This has intensified the impact on economic activity. GDP growth remained in positive ground in the first quarter, but economic activity declined 3.5% in March and 14.1% in April. Figures are likely to be worse for May and June in line with the broadening of lockdowns. Central Bank estimates from last week set the contraction of GDP between -5.5% and -7.5% in 2020, with the range broadened to take into account uncertainty around the persistence of constraints. 12. Assuming that constraints will begin to roll back in the third quarter, we estimate GDP to grow between 4.75% to 6.25% in 2021, and 3%-4% in 2022. 13. While the drop in GDP in 2020 will be the deepest in 35 years, prospects remain better than in other Latin American and Caribbean (LAC) countries. This owes to five factors: a. Structural factors are more favorable than in other EMEs. Chile has a deeper domestic financial market, where institutional investors play a major role; remittances have never been a source of foreign revenue, and the composition of foreign trade means that the terms of trade are improving rather than worsening. Even the informal sector, while bigger than in advanced economies (AE), at 30% of the labor force is smaller than it is in other LAC countries. b.
Taking advantage of this opportunity wisely can benefit exporters immensely. The second source of opportunities is the upcoming regional economic integration. With the advent of the ASEAN Economic Community (AEC), intra-regional trade volume will grow given that more trade barriers are removed. With its geographical advantage, especially its proximity to the vibrant CLMV countries, Thailand gets a head start in positioning itself as an investment and production hub for the AEC, although this requires continued efforts on minimizing regulatory burdens for businesses and increasing regional connectivity by strategic investment in logistics and transportation systems. After all, combining the capital and the technology of more advanced members with the cost advantage of newer members will result in a synergy that benefits the region as a whole. It should be noted, also, that the rising significance of intra-regional trade will serve the region well as an additional buffer against weak global environments. 4  BIS central bankers’ speeches  To support Thai businesses to seek investment opportunities abroad, the Bank of Thailand continues to gradually relax capital flow regulations, initially on outward direct investment and more recently on portfolio investment for Accredited Investors. On a related note, to facilitate banking integration, ASEAN central banks are also in the process of negotiating the common standard of Qualified ASEAN Banks (QABs), which will allow qualified banks to expand into other ASEAN countries with greater ease.