The International Monetary Fund (IMF) on Wednesday said it expected Chilean economic growth to slow to 5.3 percent next year from 5.8 percent in 2007, but said the economy was well placed to weather external shocks.

In a Chile country report, the IMF said it would revise its inflation forecasts for Chile upward, and now saw year-end inflation of around 5.5 percent in 2007, easing to around 3.0 percent in 2008.

The IMF said it expected the central bank to tighten monetary policy further in the coming months as excess capacity is absorbed and as the economy continues to rebound from a poor performance in 2006.

The Washington-based body said the impact of recent turbulence in financial markets had been relatively mild in Chile and that the country's financial system was strong.

However, it warned that the risks to the Chilean economy were greater now than in May, when IMF officials visited the country. This was due to increased uncertainties about the global financial system, the outlook for the U.S. economy and waning investor appetite for risk, it said.

Inflation International Monetary Fund