In an article for leading financial magazine, FTSE Global Markets, Robert von Oldershausen, Commerzbank’s Senior Relationship Manager for FI Latin America, explores the economy of Chile, and assesses its capacity to weather current challenges.
The article notes that Chile has been at the forefront of Latin American economic growth since the 1980s, posting impressive rates of around 5% GDP growth. Yet growth has slumped somewhat in recent years, with little more than 2% now forecast for the near future. This is due in large part to reduced demand from China for Chile’s vital copper exports. With a government eager to press on with expensive health and education reforms, von Oldershausen points out that reviving economic growth will be a must.
Yet he argues that Chile does have the capacity to spring back to form. The country’s ‘Economic and Social Stabilisation Fund’ – a sovereign wealth fund specifically designed to provide a buffer against low copper revenues – should help Chile’s economy survive this period of low commodity prices. Meanwhile, the country’s strong and well-connected financial sector will attract the investment it needs to support exports in key new industries, as well as its booming services sector.
Read the article online here.