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Weekly Report - 10 July 2008 (ISSN 1741-7422)

CHILE: Spectre of stagflation haunts Velasco

President Michelle Bachelet was forced to offer public backing for her beleaguered finance minister, Andrés Velasco, this week as a combination of low growth and high inflation figures triggered widespread criticism of his performance, including from within the ruling Concertación. Inflation hit a 17-year high for June at 1.5%, bringing 12-month inflation to 9.5%, the highest level for 14 years. Economic growth, meanwhile, slowed to just 2.1% in May, according to the central bank, down from 4.8% annual growth in April.

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