Sources: Central Bank of Chile and National Bureau of Statistics (INE). 8  BIS Review 65/2009  Durable exports (percentage of total exports)  Figure 5 Share of durable goods in total exports and contribution of exports to GDP quarterly growth in the fourth quarter of 2008 HK  60  SIN  50  COR  HUN FIN  RCH  40  TAI  ALE  30  HOL CAN  BEL  R2 = 0.52 -35  -30  -20  -15  -10  -5  NZL  10  AUS CHL  ARG  -25  20  BRL  NOR  COL  5  10  0  Exports (contribution to GDP, annualized quarterly change, percent) Source: Central Bank of Chile. Figure 6 Lending interest rates (1) (percent) 16  38  14  35  12  32  10  29  8  26  6  23  4  20  2  17  02  03  Commercial (2)  04  05  06  07  08  09  Consumer (2)  Housing (3) (1) Weighted average rates. (2) Nominal rates. (3) Rates in UF. Source: Central Bank of Chile.
Thus, annual CPI variation went from its 9.9 percent peak of October 2008 to 4.5 percent in April. Most measures of inflation expectations show a decline in recent months, particularly for the short term (Figure 9). The baseline scenario of this Report assumes that year-on-year inflation will continue on a downward path in the coming months with large swings between the end of this year and the  4  BIS Review 65/2009  beginning of 2010. This, because of the changes in the basis of comparison that include high figures from May through October 2008 and negative ones that accumulated from last November to February (Figure 10). Therefore, in the baseline scenario, annual CPI inflation will be negative from the end of the third quarter to the beginning of the fourth, to close the year 2009 at 0.6 percent. Then it should pick up gradually, to reach 3 percent at the end of the policy horizon, this time the second quarter of 2011. The rate of annual variation of core indicators has also dropped, a trend that will prevail until the first half of 2010, when they will start growing steadily to also hit 3 percent by the end of the policy horizon (Table 3). The path projected for inflation rests on a number of assumptions. On one hand, import costs will not be a source of additional inflationary pressures. Commodity prices will post small increases in the next two years, in line with the slow recovery foreseen for the world economy.