Corbo said that at the last meeting of the central bank's monetary policy committee, the general view was that inflation would be a full point lower than the bank had feared. This means that the calendar-year rate for 2003 is likely to be around 2%.
One reason for the growing confidence in the economy is the strong pick-up in copper prices. This commodity supplies around 40% of the country's export revenues. The state-owned copper company, Corporación del Cobre, which is on course for record profits, pays more in corporate taxes than all the other companies in the country put together. Even though the copper price sagged as profit-taking set in the penultimate week of November, the price is still almost 24% higher than at the start of the year. Even after the profit-taking, which took prices down from US$0.94 per pound to US$0.89, the price is a far cry from the US$0.72 level of the first month of this year. The main reason for the rise in prices has been the tightening of copper stocks across the world. Inventories are down by almost 50%, at 865,000t.
The central bank is forecasting that growth this year will be around 4.4%. This is more than double the 2.2% rate recorded in 2002. While the surge in copper prices is helping the export sector, low interest rates are sparking domestic demand. Exports in the third quarter were up by 13.5%, thanks to the surge in commodity prices, while imports have, finally, started to rise. They were up by 4% year-on-year in the third quarter. In October, however, they were up by 34% compared with October 2002. Imports of capital and consumer goods were both up by 30% in October, year-on-year, while imports of intermediate goods were up by 40% in the month.
The central bank reported that economic activity in September was up by 4.2% year-on-year. This was well above what the markets had been expecting. They were forecasting a rise of 3.4%. Month on month, the rise in economic activity in September was a healthy 0.7%. This brought the nine-month growth rate to 3.2%. The final quarter is likely to be the best of the year.
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