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 lower oil prices will...

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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...

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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...

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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...

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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 the market value growth, whereas lower oil prices should feed through to a higher spending power at the consumer level. Low penetration of smartphones and tablets should continue to be the key drivers of Chile's consumer electronics market over our forecast period, helped by their growing affordability and the advent of the USD100 smartphone.

Headline Expenditure Projections

Computer sales: USD1.269bn in 2015 to USD1.368bn in 2016, 7.8% in US dollar terms. Unit growth is being driven by the boom in tablet sales, but with additional volume concentrated at the low-end, and peso depreciation forecast for 2015, we expect a contraction in market value.

AV sales: USD1.198bn...

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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,...

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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 5.9% year-on-year in 2015 and maintain a slightly higher compound annual growth rate of 6.6% till the end of our forecast period in 2019. Consumption will be driven by the gradually increasing purchasing power, as income levels catch up with those in more developed markets. However, we see the country's private consumption growth remaining sluggish, which will be a burden on food and drink spending.

...

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Freight Transport

Chile Freight Transport

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BMI View: For 2015, BMI maintains its cautious outlook on Chile's freight transport sector, and the economy as a whole, largely on the back of the slowdown in Chinese growth and its demand for copper. We believe that weaker fixed investment in Chile amid mounting external headwinds, such as cooling external demand for copper, will affect real GDP growth in Chile in 2015. In addition, deteriorating investor sentiment and an ongoing slowdown in private consumption will drive growth even lower in Chile in 2015. Economic growth will accelerate moderately in 2015 on the back of stronger government consumption, an improved net exports position and a slight rebound in fixed investment.

Considerable investment in the expansion of Chile'...

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Information Technology

Chile Information Technology

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BMI View: Our strong outlook for the Chilean IT market is backed up by acceleration in real GDP growth compared to 2014. The government's fiscal stimulus should have positive spillover effects for the IT industry, which draws a large percentage of revenues from the public sector. Lower oil prices should support stronger economic activity among consumers, with potential for greater spending on IT hardware such as tablets and laptops. However, in local currency terms, the IT market will decline as a result of the weaker outlook for the peso against the dollar. Falling copper prices and bull run on the US dollar will counteract the positive effects from lower oil prices. IT services are...

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Infrastructure

Chile Infrastructure

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BMI View:   We forecast modest growth of 2.6% for Chile's construction industry in 2015 on the back of falling fixed investment and weakening copper prices - the country's primary export. Despite offering one of the most attractive business environments in the region, we highlight that recent tender delays and contract cancellations will have a detrimental impact on investor sentiment towards the Chilean market.

Key Trends And Developments

  • Chile's unique geography raises particular challenges for transport infrastructure. However, the attractive investment environment means that the sector will maintain solid growth in the medium term. Road building remains the primary...

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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, valued at US$49 in 2013, ranks first in Latin America. BMI forecasts a low double-digit 2013-2018 CAGR in US dollar terms, fuelled by planned public hospital modernisation, taking the market to US$1.4bn. Medical device imports are extremely high, as production is limited....

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Mining

Chile Mining

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BMI View:  Chile's mining sector will see subdued average annual growth of 1.2% in 2015-2018. The country's stable political and business environments, and significant mineral reserves, will encourage continued sector investment. Yet elevated operational costs, lagging productivity, regulatory changes, and subdued copper and precious metal prices will limit sector growth and...

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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. However, the country's leadership recognises the unlikelihood of a trend reversal, implementing a new national energy strategy to spur greater development of the sector where possible. The Bachelet administration has continued Chile's traditions of a liberal economy, regulatory transparency, and...

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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 : Well into our extended forecast period, market conditions in Chile remain very attractive for multinational drugmakers. Although cost containment and measures to promote the uptake of generics are ongoing, the pace of reform is slow and entrants will continue to enjoy a relatively flexible operating environment. Notably, the private sector, which constitutes a disproportionate share of total spending, is markedly less price sensitive than public consumers and will continue to exhibit strong bias towards patented treatments; maintaining strong demand for pharmaceuticals.

Headline Expenditure Projections

  • Pharmaceuticals: From CLP1,792bn (USD2.98bn) to CLP1,984bn (USD3.33bn) in 2014; +8.7% in local currency terms and -6.2% in US dollar terms. Up from Q414....

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Power

Chile Power

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BMI View: Chile will remain 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 liberalised electricity sector will continue to support investment in new power capacity, strengthening our upbeat forecast for growth in electricity generation. While investment in large-scale hydropower ...

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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...

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Renewables

Chile Renewables

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BMI View: Chile has emerged as a key global renewables hub, in line with our bullish forecasts for growth over the next 10 years. The amount of capacity in the pipeline - for solar and wind projects - is vast; supporting our view that renewables developers will continue to seek out the market for investment, due to the attractive rewards on offer.

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...

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Retail

Chile Retail

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BMI View: The Chilean retail sector is to remain one of the most open and attractive within the region for foreign investment during our forecast period, between 2015 and 2019. Consumer demand will be fuelled as disposable incomes rise as a result of the expanding middle class and falling unemployment levels. Our forecast that total household spending will increase during the period supports this view as well as highlighting opportunities for investment in the retail sector.

Within the region, Chile boasts one of the strongest economies and, coupled with its low barriers to entry, it will continue to attract foreign retailers. From 2016, total household spending is expected to experience steady growth which will be reinforced by the percentage of the population earning USD10,000-plus and the low rate of unemployment, a reflection of the increasing affluence of the...

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Shipping

Chile Shipping

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BMI View: Considerable investment in the expansion of Chile's ports confirms our positive outlook for its ports infrastructure and the wider construction industry. In the near-term, we expect the port of San Antonio, now the country's largest port, to continue to outperform the port of Valparaíso. The former is expected to continue its solid pace of growth witnessed recently, registering strong growth in container throughput over our medium-term forecast period. There is downside risk to our forecasts from the 'Short Law' on ports, currently in parliament, which is widely expected to lower Chilean ports' productivity over the medium-term.

A stable political outlook and sound economic fundamentals...

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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. Claro, Movistar and Entel each won blocks of 700MHz spectrum in a March 2014 auction, however, the allocation had been delayed by a legal challenge which threatened to push the allocation back by two years. 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...

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Tourism

Chile Tourism

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BMI View: We expect Chile's tourism industry to perform well in 2015, with forecast tourist arrivals growth of 7.0%. This is set to feed into continued growth for the hotels and restaurants industry, with hotel numbers forecast to grow by 4.4% in 2015.

The Chile tourism report examines the strong long-term potential currently being offered by the local tourism industry, bolstered by continuing strong levels of government support. BMI is positive about Chile's medium-term growth prospects, with government support for industry initiatives and strong arrivals growth forecast to 2019.

The report also analyses the growth and risk management strategies being employed by some of the leading players in the Chilean accommodation sector as they seek to maximise the tremendous growth opportunities being offered...

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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...

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