The Chilean economy’s growth has additionally been affected by multiple strikes, political scandals and corporate tax violations, hurting consumer and investor confidence. Adding to the weakness has been that the Santiago area ski resorts are one-month late in opening, affecting many jobs and retail related sales reportedly off 30 percent.
Santiago Stock Exchange’s IPSA index has fallen since its 52-week high on May 11 at 4,144 to Tuesday’s close of 3,878, down approximately 6.5 percent.
The Central Bank has been curtailed in its effort to lower interest rates to spurn economic activity as inflation has continued to hover above their target range. Lower rates mean a lower peso, which increases import costs, i.e. increase in inflation.
The Central Bank is also looking with concern the slowing Chinese economy and the dramatic drop in their equity markets. China just last Sunday lowered interest rates for the fifth time since November and their equity markets have dropped to “bear-market” territory, down over 20 percent in less than one-month.