05 May 2009

Chile Lending May Rise 2%, Bank Association Says

By Nathan Gill and James Attwood
May 5 (Bloomberg) -- Bank lending in Chile may increase by 2 percent this year after the economy probably “touched bottom” in the first quarter, said Hernan Somerville, president of the country’s banking association.

Chile’s economy may recover in the coming months, ending the year little changed from last year, Somerville told reporters in Santiago today. Chilean authorities have slashed the benchmark interest rate by 6.5 percentage points and started a $4 billion stimulus package to cushion the economy from the global financial crisis. The economy contracted a less-than-expected 0.7 percent in March from the same month a year earlier, the central bank said today on its Web site.

“We see that as the economic cycle probably has touched bottom in the first quarter in Chile, and is now rebuilding, lending should return to these levels of growth,” Somerville said.

The government may unveil in the coming weeks further measures to stimulate spending in the country, he said.

Economists expected a 1.6 percent decline in the economy last month, according to the median forecast in a Bloomberg survey of 17 economists. Seasonally adjusted, the economy increased 0.2 percent from February, the second rise in three months, the central bank said today.