But during times of global slowdown and increased financial stress, the opposite occurs, with a peso depreciation and greater net worth in the books (figure 5). As is typical of our yearly account to the Senate, in this Report we present the evolution of the Bank’s balance sheet and its prospects for the next year. In the baseline scenario, if the gap between external and internal interest rates remains, we expect that the profitability of our assets will continue to fall short of the cost of our liabilities. Although we foresee no further deterioration in the Bank’s equity, it will continue to be negative. The recent increase in international reserves has a negative effect on these results, but it has to its favor the intangible benefit of a strengthened liquidity position. However, as we said when we announced the intervention program, the level of international reserves we will reach by the end of the year is close to the limits that can be absorbed by our equity position. Still, this net worth – which originates mainly in the costly financial crisis of the 1980s – has not been an obstacle for the Bank to conduct its monetary policy with independence and flexibility. To sum up, we face a complex external scenario. Doubts about how it will unfold and how it will affect the Chilean economy advise acting with prudence, but the Board is convinced that the country is on a good stand to deal with it.
BIS central bankers’ speeches  13  Figure 13 Retail sales and new car sales (1) (2) (index, 2003=100)  250  Employment and unemployment (1) (index, centered on mean of period 19902011)  225  300  200  250  175  200  150  150  125  100  100  50  20.00  20  0.00  0  -20.00  -20  -40.00  -40  06 07 08 09 10 11 Durables Non-durables  40  350 40.00  New cars  90 93 96 99 02 05 08 11 Employment  Unemployment  (1) Seasonally-adjusted series. (2) Sold during moving quarter. Sources: National Automobile Association of Chile, Central Bank of Chile, National Chamber of Commerce, and Ricaurte, M. 2011, “Indicadores de Mercado Laboral para la Comparación de las Crisis Asiática y Financiera Internacional”. Preliminary document, Central Bank of Chile, June. Table 3 Economic growth and current account (annual change, percent) 2009  2010  GDP National income  -1.7 -1.9  5.2 6.25-6.75 4.25-5.25 15.7 6.6 4.2  Domestic demand Domestic demand (w/o inventory change) Gross fixed capital formation Total consumption Goods and services exports Goods and services imports  -5.9 -2.9 -15.9 1.9 -6.4 -14.6  16.4 11.5 18.8 9.3 1.9 29.5  9.1 9.7 14.4 8.2 6.5 12.0  4.5 5.4 7.1 4.9 5.0 4.6  1.6  1.9  -1.0  -2.1  Current account (% of GDP)  2011 (f)  2012 (f)  (f) Forecast. Source: Central Bank of Chile.