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The country has seen dramatic shifts in the economic climate recently, due to the international slowdown. Although Chile's stock market has held up well, 79% out of 70 economists who participated in a recent survey by Diario Financiero said they expect Chile to be in recession in 2009.

The negative sentiment among market participants is accompanied by a 1.4% decline in production in January - the first decline in a decade, as well as a steep decline in the inflation rate.

The current outlook is significantly below the view held by local market participants in December, with an expected growth of at least 1%, or the even more optimistic estimate by the Central Bank of 2 to 3% growth.

On the optimistic side, Chile's president Michelle Bachelet, last week expressed confidence in the local economy, expecting to see positive growth in the coming months, although at a lower rate.

Bachelet's view contrasts with that of the president of the Central Bank, José de Gregorio, who is not ruling out the possibility of an official recession, at the same time opening for further interest rate cuts, following the 250 basis point cut already done in February, which left the target interest rate at 4.75%.

Source: Chile in 2009: Economists Expect a Recession