Chile is rich in copper, a highly sought-after commodity and the main driver of export growth in the country. Its political system is stable and democratic, with strong institutions. This is reflected in its comprehensive legal framework and independent judiciary. Chile’s prudent fiscal and monetary policy execution in recent years, based upon cooperation with international financial institutions, has contributed greatly to macroeconomic stability.

We keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective in Chile. Clients also benefit from in-depth analysis on 22 of the country’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert teams. We aim to keep you ahead of the curve, so you can do business with ease in Chile.

Country Risk

Chile Country Risk

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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...

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Chile Operational Risk Coverage (9)

Chile Operational Risk

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BMI View: Chile is a Latin America outperformer with regard to its logistics network. The country has one of the most highly developed economies in the region, based on its copper production, and is increasingly shifting towards more consumer-based growth. Chile has also developed high-quality transport infrastructure which enables it to meet its supply chain needs. This efficient transport network and low levels of trade bureaucracy mean that Chile is an attractive location in Latin America to import and export goods. The utilities infrastructure offers widespread access and generally competitive tariffs, although the electricity and water supply will come under strain from growth industries such as mining and agriculture. As a result, Chile is ranked high regionally in the overall BMI ...

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Chile Crime & Security

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BMI View: Chile is generally safe for foreign business people and tourists, and foreigners are not at a higher risk of crime than Chilean citizens. In addition, risks posed from international terrorism and interstate violence are low, but domestic extremist groups have on occasion targeted foreign-owned businesses in some areas. Chile scores 72.1 out of 100 overall in the BMI Security and Crime Index ranking fourth out of 28 countries in the region and 36th out of 170 countries worldwide.

Petty crime, muggings, and break-ins are common in major cities. Chile's assault figures are particularly high for the region, which negatively...

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Chile Labour Market

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BMI View: Chile's labour market offers considerable attractions for employers, including a large, urbanised and well-educated workforce as well as minimal additional employment costs such as labour taxes. However, there remain key risks to businesses looking to hire staff, mostly posed by the inherent inequality of the education system, the prevalence of trade unions and the difficulty of employing foreign workers. Nevertheless, Chile remains the outperformer in Latin America in the overall BMI Labour Market Risk Index, ranked first with a score of 66.1 out of 100, Indicating the lower level of employment risks that businesses will face in the country compared to its regional peers.

Significant advances...

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Chile Logistics

Chile Trade & Investment

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BMI View : Chile is a regional outperformer in BMI 's Trade and Investment Risks Index. A score of 66.8 out of 100 puts Chile in first place out of 28 countries in the Latin America region and 34th out of 170 countries globally. Chile's good standing is boosted by a developed regulatory environment and transparent institutions. However, the score is negatively impacted by the costly bureaucratic process and a complex taxation system.

Chile's lowest score in the Trade and Investment Risks Index is for Trade...

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Chile Industry Coverage (22)

Autos

Chile Autos

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Vehicle sales in Chile increased 15.0% year-on-year (y-o-y) in the first eight months of 2013, to 242,257 units. BMI forecasts a 10% increase over the course of the year. We expect sales to moderate somewhat in the latter part of the year, as we believe the country's weak private consumption story and weakness in the mining sector will start to filter through to the market, and higher base effects from strong H212 sales volumes will temper the growth rate.

We believe that the Chilean consumer is entering a period of slower growth over the medium term, which has partly informed our forecast of a 9% increase in 2014, a slight slowdown from 2013 levels, and our expectation for fairly tepid growth over the remainder of our 2017 forecast period. We forecast sustained positive growth in the market, but that this will be moderated by the country's relatively subdued consumer story. Indeed, we believe that much of this growth...

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Commercial Banking

Chile Commercial Banking

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...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Consumer Electronics

Chile Consumer Electronics

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BMI View: In 2015, peso depreciation will be a drag on market value growth, but this effect will be somewhat countered by lower oil prices that should feed through to a higher spending power at the consumer level. Despite some ambiguity, we expect 2015 to be the weakest year of growth in the forecast period due to peso depreciation. Over the medium term we expect household income growth, combined with relatively low penetration of smartphones and tablets, means there remain opportunities for both volume and value growth in Chile in 2015-2019.

Headline Expenditure Projections

Computer sales: USD1.26bn in 2014 to USD1.18bn...

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Defence & Security

Chile Defence & Security

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BMI View: Domestic security threats continue and have become more violent over 2014. The spate of bombings in a terror campaign has seen military personnel called into action. Chile's reduction of overseas troops indicates the need to focus on domestic security issues that has been recognised by President Michelle Bachelet. However, there are further measures to be acted upon in her progressive outline for the Chilean armed forces. The bombings on the Santiago subway have rocked the nation into acting against those cells that perpetrated the attack.

While the number of violent domestic incidents has decreased, the level of...

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Food & Drink

Chile Food & Drink

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BMI View: We maintain a positive outlook for Chile's food and drink industry as its food consumption is expected to expand by a compound annual growth rate of 6.6% between 2014 and 2019. More generally, Chile's food and drink sector will look increasingly attractive compared with other Latin American markets, as lower global oil prices provide tailwinds to Chilean consumers. The uptick in private consumption is expected to boost demand for premium and innovative products. We forecast private consumption growth to be 2.7% in 2015, up from 2.2% in 2014, before averaging 4.1% in the remainder of our forecast period to 2019.

Headline Industry Forecasts (local currency)

  • Total food consumption growth year-on-year (y-o-y) in 2015: +5.9%;...

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Freight Transport

Chile Freight Transport

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BMI View: We are more bullish on the Chilean freight transport sector compared with recent quarters, largely as a result of strengthening macro fundamentals in the economy. Greater demand for consumer goods as a result of an uptick in private consumption and disposable incomes, a spate of transport infrastructure-focused projects and increasingly cost-competitive exports all combine to present a favourable outlook for freight transport in Chile.

Chile's freight transport sector now is among the most attractive in Latin America. While Brazil has been struggling to advance its considerable project pipeline, Chile has been making huge strides in terms of the number of projects awarded. An attractive investment environment means the country's transport infrastructure sector will maintain solid growth. Road building remains the primary focus, but railways, airports and ports are also...

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Information Technology

Chile Information Technology

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BMI View: Although peso depreciation against the US dollar continues to weigh on the growth outlook for Chile's IT market in 2015, particularly in the hardware market, we expect overall demand growth will accelerate from 2014. Our strong outlook for the Chilean IT market is backed up by acceleration in real GDP growth compared to 2014, while the government's fiscal stimulus should also have positive spill-over effects for the IT industry, which draws a large percentage of revenues from the public sector. Meanwhile, lower oil prices should support stronger economic...

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Infrastructure

Chile Infrastructure

Insurance

Chile Insurance

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BMI View: The latest news flow from Chile's sophisticated insurance sector remains generally positive. In local currency terms, real insurance premiums have been expanding in both of the main segments. The already strong regulatory environment continues to improve. The leading companies are well capitalised, have strong brands and enjoy close links with global financial and reinsurance markets. In the short term, the continuing weakness of the CLP will likely constrain the growth in premiums in USD terms. Competition remains fierce in the property and motor sub-sectors of the non-life segment. Over the recent past, lower prices and/or higher claims and commission costs have hit profitability hard. Over the medium-term, though, there are clear catalysts for steady growth in both the life and the non-life segment.

The Superintendencia de...

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Medical Devices

Chile Medical Devices

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BMI Industry View: The Chilean medical device market is small but per capita expenditure ranks first in Latin America. We forecast a low double-digit 2013-2018 CAGR in US dollar terms, fuelled by planned public hospital modernisation, taking the market to USD1.4bn. Medical device imports are extremely high, as...

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Mining

Chile Mining

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BMI View: Chile's mining sector will see modest average annual growth of 1.6% in 2015-2019. The country's stable political and business environments, combined with its significant mineral reserves, will encourage continued investment. Nevertheless, older mines will still face lagging productivity, while...

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Oil & Gas

Chile Oil & Gas

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BMI View: Given a lack of below-ground potential, Chile suffers from a severe deficit of hydrocarbon supplies and a high dependence on imported energy feedstock. Chile's most immediate opportunities lie in the expansion of their liquefied natural gas (LNG) import facilities as a means to meet growing domestic demand. On a longer-term basis, Chile is exploring the possibility of tapping is unconventional resources in the Magallanes region, though we caution its development has grown increasingly unlikely amid a lower oil price environment.

Headline...

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Petrochemicals

Chile Petrochemicals

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With capacity slashed permanently in 2014, the Chilean petrochemicals industry will remain a marginal, local player that will struggle to compete on the domestic market, according to BMI's Chile Petrochemicals Report. With feedstock restraints undermining production and investment, the Chilean market will be import-dependent over the medium-term although growth will be unimpressive.

The shortfall in gas feedstock has been particularly problematic for the petrochemicals industry at times of high energy demand during the winter months. In 2014, methanol production was cut as a result of the closure of two methanol plants due to insufficient natural gas feedstock to operate Methanex's complex following the curtailment of supply from Argentina and reliance on Chile's relatively small amount of gas supply.

Meanwhile, state oil producer ENAP has closed the country's small,...

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Pharmaceuticals & Healthcare

Chile Pharmaceuticals & Healthcare

Power

Chile Power

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BMI View: Chile will be one of the most attractive power markets in Latin America over the next 10 years due to its strong electricity consumption growth, driven by the country's expanding manufacturing sector and energy intensive mining industry. A stable business environment and the government's use of power procurement auctions for the regulated market will attract strong investment into new power capacity. While...

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Real Estate

Chile Real Estate

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BMI View:  Chile's economic stability is now under threat from weakening demand for copper, the country's most valuable export. As such, we are anticipating a potential slowdown in the commercial real estate market growth as we enter 2015. There remains room for optimism, however, with strong fundamentals cultivating a relatively resilient leasing market. Longer-term opportunities are significant, particularly in the retail and industrial sub-sectors and outside the capital city, Santiago.

The final quarter of 2014 presented Chile with a tough reality. Following decades of economic stability, with an average growth rate of more than 5% in recent years, growth finally began to stall. Declining Chinese demand for Chile's key export commodity, copper, is now increasing unemployment and impacting the levels of both consumption and investment. Despite this potential downturn,...

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Renewables

Chile Renewables

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BMI View: Our outlook for the Chilean renewables industry remains positive, despite the growing political headwinds facing Chile and President Bachelet's cabinet shake-up. We believe that expanding the domestic renewable energy industry will continue to be a top priority of the government and investor confidence will remain robust.

Chile's geographical characteristics mean that it has considerable potential for the development of renewable energy projects, including extensive coastline, mountains and deserts. Furthermore, the country's relatively stable operating environment and political stability make it an attractive market for international investors. Private investor interest has been high, with a number of European and US utilities and manufacturers seeking out opportunities within the sector.

Key Trends And Developments...

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Retail

Chile Retail

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BMI View: We expect Chile to remain a relatively open economy for foreign retail investment over the forecast period as the country's economic position looks set to strengthen, supporting a rise in GDP per capita, a burgeoning middle class and a fall in unemployment. An estimated average annual increase of 4.1% in total household spending between 2015 and 2019 is reflective of the rising affluence of the population.

Over our period we expect that households will experience a rise in disposable income as an increasing proportion of the population reach the USD10,000+ bracket while the unemployment rate looks set to remain relatively low. This trend is to drive...

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Shipping

Chile Shipping

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BMI View: Chilean real GDP growth slumped in 2014, and the recovery is expected to be modest in 2015 - this is reflected in a downward revision to our forecasts for the country's maritime sector. Tonnage and container throughput volumes are still expected to post growth in 2015, albeit at a slightly slower pace than envisaged in our last quarterly report. Over the medium term however, strong macroeconomic fundamentals bode well for the Chilean ports sector.

Chile's real GDP growth will accelerate in 2015 after falling copper prices and sluggish Chinese demand for industrial metals tempered growth in 2014. We now forecast 3.0% real GDP growth in 2015, an upward revision from our previous 2.6% forecast.

Exports will expand at a more rapid pace...

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Telecommunications

Chile Telecommunications

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BMI View: The announcement that 700MHz frequencies will be awarded to the three mobile operators Claro, Movistar and Entel in the first half of 2015 is an important step for the market. Movistar and Entel have already contracted equipment vendors to roll out LTE services in the 700MHz band, this should help to speed up the new spectrum release to the public. Uptake of 3G services in Chile has been among the strongest in the Latin America region, driven by a healthy competition between Claro, Movistar and Entel, with support from Subtel and the government. 4G services are also available from all three operators, with VTR soon to be the fourth operator to launch LTE. The allocation of 700MHz spectrum will relieve network congestion problems, as well as expand internet access to rural areas of the population at...

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Tourism

Chile Tourism

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BMI View: We are forecasting tourist arrivals to reach 4.09mn in 2015, representing growth of 7%. This expansion of the tourism sector is creating opportunities in the accommodation sector, with international hotel groups currently under-represented.

BMI holds a positive short-term view on the tourism sector, with tourist arrivals forecast to grow by 7% in 2015, to 4.09mn arrivals. We believe this reflects Chile's geographical variety, positive economic and political fundamentals, and strong government support for the tourism sector. We expect this rate of growth to continue until 2018, when it will decline to 1.4%, before picking up again to 4.3% in 2019. We not believe that this lower forecast growth rate reflects any deterioration in Chile's attractive fundamentals, but more a natural moderation following a period of unusually high growth between 2014...

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Water

Chile Water

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BMI View: This quarter, we have substantially revised and expanded our water forecasts for Chile. We now include wastewater collection and treatment forecasts, and Extraction forecasts. Overall, we view Chile as one of the most attractive markets in the region both for water infrastructure companies and, following the announcement of the potential sale of a key water utility, for water service companies also. However, we highlight that risks remain for industrial consumers, who will continue to face high costs for the construction of water supply and treatment facilities.

Despite a recent slowdown, Chile's water sector continues to report solid growth, driven by strong investment and good government support. A healthy business environment also help Chile outperform in terms of...

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