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 69.2 out of 100 overall in the BMI Security and Crime Index ranking 12th out of 42 countries in the region and 50th out of 201 countries worldwide....

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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 67.4 out of 100, Indicating the lower level of employment risks that businesses will face in the country compared to its regional peers....

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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 67.6 out of 100 puts Chile in second place out of 42 countries in the Latin America region and 34th out of 201 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...

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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: Chile is the most lucrative consumer electronics market in Latin America in per capita terms, supported by an affluent consumer base, particularly in and around Lima. Our analysis of household income trends supports our view for expansion of the market for consumer electronics devices over the medium term, with a deepening of the mass market expected to yield opportunities to vendors through both first-time buyers and upgrade sales. The outlook is markedly weaker in 2015 when we expect peso depreciation to be a drag on market value growth by eroding Chilean household purchasing power in global markets, i.e. for imported devices. T...

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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 have improved our short-term outlook for Chile's food and drink industry in line with the country's strong economic readings and positive consumer outlook for the rest of 2015 and 2016. We believe that strong job generation in the manufacturing sector, combined with lower fuel prices, will boost household spending over the coming quarters. We forecast the overall industry growth to remain strong across our forecast period registering a healthy 6.1% CAGR between 2014 and 2019.

Headline Industry Forecasts (local currency)

  • Total food consumption growth year-on-year (y-o-y) in 2015: +6.6%; compound annual growth rate (CAGR) 2014-2019: +6.1%

  • Per...

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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 revenue from the public sector. Meanwhile, lower oil prices should support stronger economic...

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Infrastructure

Chile Infrastructure

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BMI View: We maintain our positive construction industry growth forecast for Chile in 2015 at 2.6% in real terms on the back of weak oil prices, which will reduce the country's energy import bills. Growth in the sector will be further supported by an infrastructure fund to stimulate economic growth and boost development.

Key Trends And Developments

  • Chile is benefiting from weak oil prices as the country is a net hydrocarbon importer. Lower energy costs will increase investment in the infrastructure sector in the coming quarters.

  • A new infrastructure fund and plans to create a concessions agency further support our positive outlook for the construction industry in Chile. Apart from encouraging...

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Insurance

Chile Insurance

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BMI View: The insurance market in Chile is one of the most developed in the region, with competitive density and penetration rates. The market is open to foreign investment and benefits from the presence of major regional and global insurers which bring expertise, access to reinsurance and high levels of capital to the life and non-life sector. Both are expected to show steady growth over the forecast period, boosted by an increase in private financial consumption and growing awareness of the benefits of various insurance products.

Over the short term currency fluctuations mean that we expect to see contractions in life and non-life premiums when measured in US dollar terms. In local currency terms the outlook is more positive with solid growth expected in both sectors over 2015. This growth is supported by an acceleration of domestic economic growth: we are now...

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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 be supported by the country's stable political and business environments, combined with its significant mineral reserves. However, output growth will decline due to aging mines, while subdued copper and precious metal prices will limit sector growth and miners' expansion plans.

Chile's mining sector will be dominated by copper production over our forecast period to 2019. The sector's pipeline of copper projects and the country's global dominance in copper production will ensure the country maintains its lead despite falling ore grades and lagging productivity. In 2014, copper accounted for approximately 92% of mining exports as measured in dollar terms and nearly 55% of the...

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Oil & Gas

Chile Oil & Gas

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BMI View: With a lack of below-ground rewards, Chile suffers from a 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 its unconventional resources in the Magallanes region, though we caution its development...

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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

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BMI View : Highlighted by the passing of the 'Ricarte Soto Law', Chile will maintain its attractiveness as a growth market for drugmakers as the government displays a firm commitment to expanding public access to health services over the forecast period. In addition, the rising incidence of chronic, non-communicable disease will coincide with a high reliance on imported pharmaceuticals to safeguard the value share of patented prescription treatments. However, a dependence on the export of copper and the import of natural gas will expose Chile's vulnerable household spending to...

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Power

Chile Power

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BMI View: A stable business environment, strong growth in power consumption and conducive regulations will make Chile one of the most attractive power markets in Latin America over the next 10 years. The government's use of power procurement auctions for the regulated market, coupled with energy demand from miners located far from the main power network, will create abundant investment opportunities for power developers. Meanwhile, the need to expand and upgrade Chile's power grid will drive demand for the services of providers of power transmission infrastructure.

...

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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: We maintain a positive outlook for the Chilean renewables sector, with a vast and expanding pipeline of projects planned and under construction, supporting our upbeat forecasts for the industry. Investor interest in the market remains strong, boosted by Chile's attractive investment climate and the abundance of contract opportunities for power developers.

We expect investment into Chile's renewables sector to remain strong over the coming quarters, making the country a global hot spot for renewables development. Investors will be attracted by Chile's favourable geographical characteristics, high electricity prices, strong growth in power consumption, upbeat macroeconomic outlook and conducive regulatory environment. In...

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Retail

Chile Retail

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BMI View: Years of prudent economic policies and openness to international trade have helped Chile develop into one of the most advanced economies in all of Latin America. Chile currently participates in over 20 trade agreements involving 60 different countries. This pro-growth behaviour along with the significant presence of natural resources in the country have helped it maintain sustained growth and also weather the recent financial crisis, allowing it to achieve an average real GDP growth rate of just under 5% from 2000 through to 2014. Going forward, these business-friendly policies, along with the government's recent and planned investments in infrastructure improvements should continue to make Chile a...

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Shipping

Chile Shipping

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BMI View: Healthy growth is the order of the day across Chile's ports in 2015, with the Port of San Antonio set to be the outperformer in tonnage throughput growth (7.0% year-on-year growth) and the Port of Valparaiso poised to come in first place in terms of annual box throughput (8.0%). Growth is set to remain robust over our forecast period to 2019 and our forecasts are predicated on strong macroeconomic fundamentals, improving consumer confidence and the trade pact signed between Chile and various regional peers.

The Pacific Alliance, a trade pact signed between Chile, Colombia, Mexico and Peru three years ago, entered into force on July 20. The new trade bloc aims to establish a commercial integration area based on the free circulation of goods, services, capital and people. The trade agreement abolishes certain import tariffs, according to the Colombian trade ministry, and allows...

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Telecommunications

Chile Telecommunications

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BMI View: VTR's launch of 4G services in June 2015 will put additional pressure on Chile's rapidly-evolving mobile broadband market. 3G services are already widely adopted and rising smartphone penetration is generating a commensurate increase in non-voice service usage. Progress has been undermined by mobile termination rate cuts and other regulatory developments, as well as the rebranding of Nextel as a prepaid-focused player: WOM. The country's MVNOs already cater to the lower end of the market and we believe that VTR and WOM will struggle to gain traction. We do not rule out VTR acquiring WOM, if only for its spectrum and infrastructure. Meanwhile, mobile broadband is...

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Tourism

Chile Tourism

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BMI View: We hold a positive short-to-medium-term outlook on Chile's tourism industry, with arrivals set to grow by around 7% in the coming couple of years. This will have positive implications for the accommodation sector in particular, and we expect the number of hotels in the country to grow by at least 5% each year to 2019.

BMI holds a positive view on Chile's tourism market, which benefits from strong macroeconomic fundamentals, sustained government support and good transport infrastructure. Chile has not...

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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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