Chile Country Risk Report

Published 22 July 2015 | Quarterly

  • 56 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
$1,195.00
Chile Country Risk Report

Core Views

  • Chilean real GDP growth hit bottom in 2014, and will accelerate modestly in 2015. An improving net exports position, combined with the government's fiscal stimulus and tailwinds from lower oil prices will support stronger economic activity, although headline growth will remain below the historical trend.

  • Chile's ongoing external account rebalancing will continue in the coming years, as a weaker average peso bolsters the economic competitiveness of manufactured goods exports, offsetting weakness in mining exports. Moreover, structurally lower oil prices will reduce Chile's import bill, contributing to a widening of the goods trade surplus.

  • The Chilean peso will remain under broad downside pressure from falling copper prices and a bull run in the US dollar over the coming quarters. However, structurally lower oil prices will bolster the country's terms of trade, helping the unit to stabilise following a significant sell-off.

  • The Chilean government's expansionary fiscal policies will drive a widening of the nominal budget shortfall in 2015. Beyond 2015, the deficit will begin to gradually narrow as spending policies normalise and an increase in the corporate tax rate bolsters revenues.

Major Forecast Changes

  • Tailwinds to Chilean consumers stemming from lower oil prices will more swiftly benefit Chilean consumers than we have previously expected, causing us to revise our growth estimate for 2015 upwards to 3.0%. Moreover, we have revised gross fixed capital formation expansion expectation upwards on the back of base effects from a weak 2014 and slightly higher copper project investment following delays in 2014.

Risks To Outlook

  • The risks to our exchange rate forecasts are evenly weighted. On the upside, lower oil prices could lead to a sharper narrowing of Chile's current account shortfall than our projections currently imply. This would bolster the peso, leading the unit to appreciate over the course of 2015. By contrast, the risks to...

Executive Summary
5
Core Views
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Corruption Allegations Will Temper Bachelet's Reform Agenda
8
Table: Politic al Ov ervi ew
8
Long-Term Political Outlook
9
Broad Stability To Persist
9
copper export-led growth
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Stronger Growth As Reliance On Copper Falls
14
table: Priv ate Consumpti on Forecasts
14
table: Governm ent Consumpti on Forecasts
14
table: Gross Fixed Capit al Form ati on Forecasts
15
table: Net Exports Forecast
15
Monetary Policy
16
BCC Will Initiate Tightening Amid Stabilising Economy
16
table: Inflation & Interest Rate Forecasts
17
table: Weighting Of Consum er Pric e Inf lati on Basket
17
Fiscal Policy
18
Debt Burden Will Remain Low
18
table: Fiscal Policy
18
Balance Of Payments
20
Large FDI Stock Will Ensure External Account Stability
20
table: Capital And Financial Account
21
table: Current Account Balance Forecasts
22
Exchange Rate Policy
23
CLP: Only Modest Appreciation In 2016
23
Table: BMI Curr enc y Forecast
23
Chapter 3: 10-Year Forecast
25
The Chilean Economy To 2024
25
Slower Growth, But Strong Fundamentals
25
table: LONG-TERM MACROECONOMIC FORECASTS
25
Chapter 4: Operational Risk
27
SWOT Analysis
27
Operational Risk Index
27
Operational Risk
28
Table: Operational Risk
28
Market Size And Utilities
29
Table: Latin America - Market Size and Utilities Risk
30
International Security Risk
34
Table: Latin America - Interstate Security Risks
35
Chapter 5: Key Sectors
39
Pharmaceuticals & Healthcare
39
table: Pharmaceutical Sales, Historic al Data And Forecasts
40
table: Healthcare Expenditure Trends , Historical Data And Forecasts
41
table: Governm ent Healthc are Expenditur e Trends , Hist oric al Data And Forecasts
41
table: Priv ate Healthc are Expenditur e Trends , Hist oric al Data And Forecasts
41
Telecommunications
43
table: Telecoms Sector - Mobile - Historical Data & Forecasts
44
table: Telecoms Sector - Wireline - Historical Data & Forecasts
45
Other Key Sectors
47
table: Oil and Gas Sector Key Indicators
47
table: Defence and Securit y Sector Key Indicators
47
table: Infrastructure Sector Key Indicators
47
table: Food and Drink Sector Key Indicators
48
table: Autos Sector Key Indicators
48
table: Freight Key Indicators
48
Chapter 6: BMI Global Macro Outlook
49
Global Outlook
49
Event Risk Mounting But Manageable
49
Table: Global Assumpti ons
49
Table: Developed States, Real GDP GrowtH, %
50
Table: BMI VERSUS BLOO MBERG CONSENSUS REAL GDP GROW TH FORECASTS, %
50
Table: Emerging Markets , Real GDP Growth , %
51

The Chile Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Chile. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Chile's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI  Research.

Key Uses

  • Forecast the pace and stability of Chile's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Chile's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Chile, including currency volatility, the commodity price boom and protectionist policies.

The Chile Country Risk Report by BMI  Research includes four major sections: Economic Outlook, Political Outlook, Operational Risk and Key Sector Outlook.

Economic Outlook:

How will the Chile' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Chile through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Chile Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Chile and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Chile, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Chile over the next 5-years?

BMI's Chile country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Chile Market - Political Strengths, Weaknesses, Opportunities and Threats facing Chile.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Chile's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Chile’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Chile's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Operational Risk

What are the current operational risks and difficulties associated with doing business in Chile?

The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Chile against its neighbours.

Operational Risk Contents

The chapter provides a summary of the main threats in the country, within:

  • Labour Market Risk (Education; Availability of Labour; and Labour Costs)
  • Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
  • Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
  • Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).

The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:

  • Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
  • Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
  • Evaluate Chile’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.

Key Sector Outlook*

Which industry sectors in Chile will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in Chile's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

*Not all Country Reports contain the Key Sector Outlook chapter. Please enquire above for more information.

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