Residential construction is consistent with the high level of lending for housing and with interest rates that are still low when compared to historical levels. Overall, the strength in gross fixed capital formation is consistent with the evolution of business perspectives. Although these expectations experienced a setback in 2011, they were never in the pessimistic range. They have rebounded during 2012, across different economic sectors. I do not want to skip mentioning the new National Accounts data that we will be releasing shortly, as result of the recently published 2008 Reference Compilation. Besides the update of the reference year from 2003 to 2008, the new national accounts volume measures will be compiled using chained moving bases, instead of the traditional fixed base measures. Thus, these statistics are set in a level that can be compared with that of other OECD member countries. As I stated recently, various indicators point out that activity and domestic demand will decelerate in the coming months. Nevertheless, we believe that it will do so at a slower pace than we expected a few months ago. In our December Monetary Policy Report we projected a baseline scenario where growth ranged between 3.75 and 4.75%. Some of the risk factors that in December we envisaged could reduce growth during this year – accounting for the downward bias that we announced then – have had a better evolution than forecast at the time.
Additionally, we are confronting new risks, in the face of international tensions related to Iran’s nuclear situation and its impact on the oil market. These sources of uncertainty are beyond our control. Therefore, our role as policymakers in emerging countries is to preserve flexibility and space for policies that will enable us to respond to and buffer the financial and real effects that those risks pose on our economies. Over the last years we have gained credibility, flexibility and space to implement a macroeconomic and financial policy framework that will help us smooth out the economic cycle. This framework rests on four pillars. First, monetary policy management is based on a flexible inflation-targeting regime, conducted by an autonomous central bank and supported by a floating exchange rate system. Second, a fiscal policy that is accountable and predictable thanks to a structural balance rule. The significant amount of savings accumulated during the run-up of copper prices was a crucial factor in bolstering the resilience of the Chilean economy and in providing a countercyclical fiscal boost. Third, a high degree of commercial and financial integration with the rest of the world. Finally, a sound financial system, with globally integrated, well capitalized, and adequately-regulated banks. These elements allowed us to be less affected by the Great Recession than by previous episodes. In Chile, the effects of the world slowdown of the second half of 2011 and the financial turbulences coming from Europe have so far been limited.