Business Monitor International


Chile Business Forecast Report

Published 20 October 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

  • The Chilean economy will expand at a sluggish pace in the coming quarters, as weaker growth in China and deteriorating business confidence weigh on fixed investment. In addition, falling consumer confidence indicates tepid household spending is ahead.

  • A weakening economy will hurt the ruling Nueva Mayoría (NM) coalition's popularity, prompting the Chilean government to shelve its social agenda in favour of pro-growth policies. With the NM likely to backtrack on education reform, there is a rising probability that Chile's student protest movement will reignite in the months ahead.

  • Chile's external account rebalancing will continue in the coming years, with a weaker exchange rate bolstering the country's good trade dynamics. This will see the current account deficit shrink to 1.9% of GDP in 2014 and 1.2% in 2015, from 3.4% of GDP in 2013.

Major Forecast Changes

  • We have revised down our 2014 real GDP growth forecast from 2.5% to 2.0%, and our 2015 forecast from 3.2% to 2.6%, implying a more substantial drop-off from 4.1% growth in 2013.

  • We revised down our 2014 average exchange rate forecast from CLP562.0/USD to CLP573.9/USD, expecting the peso to average CLP613.7/USD through the remainder of 2014, compared to the current spot price of CLP598.5/USD.

Risks To Outlook

  • The risks to our growth outlook are evenly weighted. On the upside, Chile's strong business environment could see foreign investment rebound in the coming quarters, even as copper prices head lower. Moreover, the government's fiscal stimulus, in tandem with a low interest rate environment, could provide the foundation for a stronger recovery in 2015. On the downside, the sharp drop in consumer and business confidence observed in recent months suggest that economic activity could, in a worst case scenario, grind to a halt, creating recessionary conditions heading into next year.

  • The risks to our long-term peso forecasts are weighted to the downside given the potential for...

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
Education Reform To Pass Despite Opposition
8
Table: Political Overview
8
Long-Term Political Outlook
9
Broad Stability To Remain In Place
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Subdued Fixed Investment To Hurt Growth
14
Table : Economic Acti vit y
14
Monetary Policy
16
Monetary Easing To Continue Amid Economic Slowdown
16
Table : Monet ary Polic y
16
Fiscal Policy
17
Budget Surplus To Narrow Through 2015
17
Table: Fiscal Policy
18
Balance Of Payments
19
Wider Trade Surplus To Drive Slimmer C/A Deficit
19
TABLE: Current Account
20
Exchange Rate Policy
21
CLP: Continued Weakness, But Largest Sell-Off Is Past
21
Table: Currency Forecast
21
Table : Exch ange Rate
22
Chapter 3: 10-Year Forecast
25
The Chilean Economy To 2023
25
Slower Growth, But Strong Fundamentals
25
Table : Long-Term Macr oec onomic Forec asts
25
Chapter 4: Business Environment
27
SWOT Analysis
27
BMI Business Environment Risk Ratings
27
Business Environment Outlook
28
Institutions
28
Table : BMI Busi ness And Oper ati on Ris k Rati ngs
28
Table : BMI Leg al Framew ork Rati ng
29
Infrastructure
30
Market Orientation
31
TABLE: LABOUR FORCE QUALITY
31
TABLE: TRADE AN D INV ESTMENT RATINGS
32
Operational Risk
33
TABLE: LATIN AMERICA - ANN UAL FDI INFLOWS
33
Chapter 5: Key Sectors
35
Pharmaceuticals & Healthcare
35
table : Pharm aceutic al Sales , Hist oric al Data & Forec asts
36
table : Healthc are Expe nditure Tre nds , Hist oric al Data & Forec asts
36
Table : Gover nme nt Healthc are Expe nditure Tre nds , Hist oric al Data & Forec asts
37
Table : Pri vate Healthc are Expe nditure Tre nds , Hist oric al Data & Forec asts
37
Telecommunications
38
Table : Telec oms Sect or - Mobile - Hist oric al Data & Forec asts
39
Table : Telec oms Sect or - Wireli ne - Hist oric al Data & Forec asts
40
Other Key Sectors
41
table : Oil & Gas Sect or Ke y Indic ators
41
table : Infr astructure Sect or Ke y Indic ators
41
table : Food & Dri nk Sect or Ke y Indic ators
41
table : Aut os Sect or Ke y Indic ators
42
Table : Freight Ke y Indic ators
42
Chapter 6: BMI Global Assumptions
43
Global Outlook
43
Global Recovery Still On Track
43
Table : Global Assumpti ons
43
Table : Devel oped States , Real GDP Growt H, %
44
Table : BMI VERSUS BLOO MBERG CON SENSUS REAL GDP GROWTH FORECASTS, %
44
Table : Emergi ng Markets , Real GDP Growth , %
45

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-2018, 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-2018.
  • 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 2014-2018?

BMI provides our fully independent 5-year forecasts for Chile through end-2018 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 2014 through to end-2018, 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-2018 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 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, 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