Chile Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

Why you should buy this report

  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Chile Country Risk Report
Product Price
$1,195.00

Core Views

  • Chilean real GDP growth will remain modest in 2016. 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 2016. Beyond 2016, the deficit will begin to gradually narrow as spending policies normalise and an increase in the corporate tax rate bolsters revenues.

Risks To Outlook

  • The primary risks to our CLP forecasts lie to the downside. Should the Chinese economy deteriorate more significantly than currently anticipated, copper prices could fall further, precipitating further depreciation of the CLP. Additionally, a more aggressive rate hiking cycle in the US could drive US dollar strength, adding greater downward pressure. Finally, continued weakness from Chile's manufacturing exports could see demand for the CLP fall short of expectation and delay the unit's rebound.

  • Risks to our growth forecasts stem primarily from global commodity markets. A continued drop in copper prices through 2016 could drive a substantial deterioration in investor sentiment, weighing on needed investments in non-commodities sectors. Moreover, if copper prices do not find a base in 2016, the country's exports might take longer to return to growth than currently expected, dampening the positive contribution of net exports to headline growth.

Macroeconomic Forecasts (Chile 2014-2017)
Indicator 2014 2015e 2016f 2017f
f=BMI forecast; Source: BCC, BMI
Real GDP growth, % y-o-y 1.9 2.4 2.4 4.0
Nominal GDP, USDbn 257.9 239.3 260.2 281.2
Consumer price inflation, % y-o-y, eop 4.6 3.9 3.5 2.9
Exchange rate CLP/USD, eop 606.45 708.60 630.00 620.00
Budget balance, % of GDP -1.6 -1.9 -2.0 -1.2
Current account balance, % of GDP -1.2 -0.4 -0.3 -0.2
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Robust Investment Environment Despite Rising Risks
8
TABLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
9
Broad Stability To Persist
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Investment Into Retail, Manufacturing Will Drive Growth
14
Key Characteristics Of GDP By Expenditure
15
TABLE: PRIVATE CONSUMPTION FORECASTS
15
TABLE: GOVERNMENT CONSUMPTION FORECASTS
15
TABLE: GROSS FIXED CAPITAL FORMATION FORECASTS
16
TABLE: NET EXPORTS FORECAST
16
Monetary Policy
16
On Track For 2016 Rate Hikes
16
Structural Inflation
17
TABLE: WEIGHTING OF CONSUMER PRICE INFLATION BASKET
17
Fiscal Policy
18
Continued Stimulus Will Drive Up Fiscal Deficit In 2016
18
TABEL: FISCAL POLICY
18
Fiscal & Debt Profile
19
Balance Of Payments
20
Rising Trade Surpluses Will Temper Current Account Deficits
20
Outlook On External Position
21
Chapter 3: 10-Year Forecast
23
The Chilean Economy To 2024
23
Slower Growth, But Strong Fundamentals
23
TABLE: LONG-TERM MACROECONOMIC FORECASTS
23
Chapter 4: Operational Risk
25
SWOT Analysis
25
Operational Risk Index
25
Operational Risk
26
TABLE: OPERATIONAL RISK
26
Education
27
TABLE: LATIN AMERICA - EDUCATION RISK
28
TABLE: GRADUATES FROM CHILEAN UNIVERSITIES BY SUBJECT, 2006-2012
29
Government Intervention
32
TABLE: LATIN AMERICA - GOVERNMENT INTERVENTION RISK
33
TABLE: PERSONAL AND INCOME TAX BRACKETS
34
Chapter 5: BMI Global Macro Outlook
37
Global Outlook
37
Global Growth Weak As EMs Squeezed
37
TABLE: GLOBAL ASSUMPTIONS
37
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
38
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
38
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
39

Assess your risk exposure in Chile with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Chile with confidence.

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