Meanwhile, in the United States, the subprime mortgage crisis had already erupted in mid 2007, and by March 2008 an important financial institution, Bear Stearns, had collapsed. An important point of this preamble of the facts of September 2008 is that the string of events I just mentioned had no significant effect on economic expectations, nor did it change the mean of expected growth or increase uncertainty. This, despite the fact that the Bear Stearns bankruptcy was a very significant occurrence for the international financial market. Actually, the volatility of stock markets went up a rung in mid-2007, but was pretty mild if compared with September 2008 (Figure 4). This stock volatility index (VIX), which is normally used as a  4  BIS Review 76/2009  good indicator of uncertainty, 5 shows how it increased several times during the peak of the crisis in September and October of last year. The latest figures show uncertainty declining, although it remains high. Thus, according to market consensus, world growth for 2008-2009 posted no significant changes between March and September of 2008 (Figure 5). The situation in Chile did not differ much (Figure 6). During the whole of 2007, growth projections for 2008 fluctuated around 5 percent, even after the eruption of the housing crisis in the United States. At the time of Bear Stearns’ bankruptcy there had been some adjustment in expected growth for the year, but in September there was even a slight correction upwards. The Bank’s forecasts were similar.
Figure 14  Change in growth projections for 2009 and 2010 (month-on-month variation of median projection, percentage points) 2009  2010  0.5  0.5  0.5  0.5  0.0  0.0  0.0  0.0  -0.5  -0.5 -0.5  -0.5  -1.0  -1.0 -1.0  -1.0  -1.5  -1.5 -1.5  -1.5  -2.0  -2.0 -2.0  -2.0  -2.5  Feb.08  Jul.08  Dec.08  -2.5 -2.5  May.09  Feb.09  Mar.09  Apr.09  -2.5  May.09  United States  Japan  Eurozone  Latin America  Chile  Mexico  Brazil  Eastern Europe  Source: Consensus Forecasts. 14  BIS Review 76/2009