Business Monitor International


Chile Business Forecast Report

Published 23 April 2014

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

Core Views

  • Deteriorating investor sentiment and an ongoing slowdown in private consumption will drive real GDP growth lower in Chile in 2014. 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, though our forecast is below consensus.

  • Near-term upside for copper prices will spur a rally in the Chilean peso over the coming weeks. However, we expect the rally will be short-lived as weak economic growth, monetary easing by the central bank and monetary policy normalisation in the US keep the exchange rate under depreciatory pressure in H214. A narrowing current account deficit will prevent the currency from taking a major leg lower in 2015.

  • The Banco Central de Chile will continue its monetary easing cycle in the coming months, cutting the benchmark policy rate by 50 basis points to 3.50% by end-2014. Well-contained inflation expectations will provide the bank leeway to pursue additional rate cuts, amid signs of a continued slowdown in economic activity.

  • A weaker Chilean peso in average terms will bolster Chile's export competitiveness while driving a contraction in goods imports in 2014, leading to a narrowing of the current account deficit. Chile's robust stock of foreign reserves and strong net international investment position will ensure that the balance of payments position remains stable, despite a widening financial account deficit.

Major Forecast Changes

  • We have revised down our 2014 real GDP growth forecast from 3.1% to 2.8%. This implies a substantial drop-off from 4.1% real GDP growth in 2013 and average growth of 5.7% over 2010-2012.

  • Our forecast for additional rate cuts this year by the Banco Central de Chile marks a shift from our prior view that the bank would hold rates at 4.00% through end-2015.

Risks To Outlook

  • Our Commodities team has highlighted downside risks to its copper forecast stemming from the...

Table of Contents

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 Ratings
7
Domestic Politics
8
2013 To See Tight Race For President
8
TABLE: POLITICAL OVERVIEW
9
Long-Term Political Outlook
10
Stability Likely, Though Challenges Remain
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Uptick Belies Long-Term Growth Slowdown
14
TABLE: ECONOMIC ACTIVITY
14
Monetary Policy
16
Resilient Economy Posing Upside Risk To Rate View
16
Fiscal Policy
17
An Enviable Fiscal Outlook
17
TABLE: FISCAL POLICY
17
Balance Of Payments
19
Wide Current Account Deficits On Weak External Demand
19
TABLE: CURRENT ACCOUNT
20
Exchange Rate Policy
22
CLP: Peso Strength To Fade On Copper Weakness In H213
22
TABLE: CURRENCY FORECAST
22
Regional Economic Activity
23
What If We Are Wrong On Chinese Growth-: The Regional Implications
23
TABLE: CHINA'S CONSUMPTION OF SELECTED COMMODITIES, % OF GLOBAL CONSUMPTION
23
Chapter 3: 10-Year Forecast
29
The Chilean Economy To 2022
29
Slower Growth, But Strong Fundamentals
29
TABLE: LONG-TERM MACROECONOMIC FORECASTS
29
Chapter 4: Business Environment
31
SWOT Analysis
31
BMI Business Environment Risk Ratings
31
Business Environment Outlook
32
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS
32
TABLE: BMI LEGAL FRAMEWORK RATING
33
Infrastructure
34
TABLE: LABOUR FORCE QUALITY
35
TABLE: TRADE AND INVESTMENT RATINGS
36
Operational Risk
37
TABLE: LATIN AMERICA - ANNUAL FDI INFLOWS
37
Chapter 5: Key Sectors
39
Autos
39
TABLE: CHILE AUTOS SALES - HISTORICAL DATA AND FORECASTS (CBUS UNLESS OTHERWISE STATED), 2010-2017
40
Food & Drink
41
TABLE: FOOD CONSUMPTION INDICATORS - HISTORICAL DATA & FORECASTS, 2010-2017
42
TABLE: HOT DRINKS VALUE/VOLUME SALES - HISTORICAL DATA & FORECASTS, 2010-2017
44
TABLE: MASS GROCERY RETAIL SALES BY FORMAT - HISTORICAL DATA & FORECASTS, 2010-2017
45
Other Key Sectors
47
TABLE: INFRASTRUCTURE SECTOR KEY INDICATORS
47
TABLE: PHARMA SECTOR KEY INDICATORS
47
TABLE: DEFENCE AND SECURITY SECTOR KEY INDICATORS
47
TABLE: TELECOMS SECTOR KEY INDICATORS
48
Chapter 6: BMI Global Assumptions
49
Global Outlook
49
Growth May Be Turning The Corner
49
TABLE: GLOBAL ASSUMPTIONS
49
TABLE: DEVELOPED STATES, REAL GDP GROWTH FORECASTS
50
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS (%)
50
TABLE: EMERGING MARKETS, REAL GDP GROWTH FORECASTS
51

The Chile Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Chile and 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-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Chile's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Chile's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Chile, including currency volatility, the commodity price boom and protectionist policies.

The Chile Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Chile economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Chile through end-2017 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 Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, 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 Rankings 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 exposure).
  • Global Assumptions - forecasts for each year to end-2017 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 Rankings evaluate 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 Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings 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.

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.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Chile, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Chile's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

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

BMI's 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 with developments over 2008-2012, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2013-2017, using BMI's proprietary industry modeling technique, which incorporates all 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.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express