Some honeymoon Michelle Bachelet has had. Her second presidency was welcomed in by a powerful earthquake in the Atacama desert, followed shortly afterwards by a raging fire in Valparaíso, while most recently a spate of terrorist attacks has been disturbing Chile’s normally relatively tranquil populace.
All this as the economy sputters to its slowest rate of growth since Chile was last shaken by a major earthquake in March 2010, with the central bank confirming the downward trend on Monday when it announced year-on-year economic growth in August of just 0.3 per cent. Read more >>
The FT’s Benedict Mander examines the tricky task for Chile’s president, Michelle Bachelet, of pushing through reforms to reduce inequality, especially in education, as the economy starts to slow with lower demand for its main export, copper.
What a difference a mountain range makes. To the east of the Andes, Argentina is in the throes of an old fashioned, disorderly devaluation, in which authorities scramble to plug every leaking channel of hard currency flows until at last they are carried off in the flood. To the west, Chile’s authorities are looking on with calm equanimity as their currency gently subsides to its own level.
What is it, other than snow-capped peaks, that unites and separates their two worlds? Read more >>
Michelle Bachelet (pictured) is well on her way to returning to the Chilean presidency after winning 46.7 per cent of the votes in the first round of the country’s presidential elections on Sunday.
But while the 62-year old former pediatrician is expected to win the second round run-off on December 15 by a comfortable margin, she is also set to inherit an economy that is much less robust than the one she presided over during with her previous stint in 2006-2010. Read more >>
Better safe than sorry? Chile on Thursday unexpectedly cut its benchmark interest rate by 25bps to 4.75 per cent on Thursday. It’s its first rate cut since January 2012.
Although economic growth for the country – forecast at between 4-4.5 per cent for this year – is still the envy of the region (Mexico and Brazil by contrast are expected to grow 1.7 per cent and 2.4 per cent respectively), it has weakened from previous estimates of 4-5 per cent. Read more >>
Is Chile edging closer to a rate cut?
Disappointing GDP data lately have certainly increased the chances. Chile’s growth – much lauded by a centre-right government bent on delivering a better performance than under the leftist coalition that ruled Chile for 20 years – has suffered a hiccup lately, fuelling expectations that a rate cut was nearing. Read more >>
Chile is concerned.
It is the world’s top copper producer; copper makes up more than half the value of its exports and 15 per cent of its GDP. Windfalls from sales of the red metal are squirreled into sovereign wealth funds, to allow countercyclical spending on a rainy day. The last thing Chile wants is for copper prices to fall, as they have been doing lately – hitting an 18 month low this week. Read more >>
By Jude Webber and Jack Farchy
There’s no such thing as a free lunch, so the saying goes.
But a $200m-a-day lunch? That is about what a nearly three-week-old ports strike in Chile is costing in paralysed exports and imports, according to Chile’s Chamber of Commerce. There are some 9,000 tonnes a day of copper trapped in ports in the world’s top copper producing nation because of the stoppage. Read more >>
Slow down, Chilean consumer spending, you grow too fast.
That is the warning from Capital Economics after Chile published yet another stellar growth figure – a 6.7 per cent leap in economic activity (as measured by the monthly GDP proxy called Imacec) in January compared with January 2012. Read more >>
The Central Bank of Chile has announced year-on-year GDP growth of 5.7 per cent in the third quarter, beating consensus forecasts of 5.4 per cent. Domestic demand drove GDP growth despite external factors that are proving to be a drag on the economy. Read more >>
Reinforcing its reputation of spotting problems early and taking action, Chile’s central bank is seeking to head off end-of-year liquidity strains by reinstating a tactic it used last year: a temporary repurchase window allowing banks to pawn bonds for cash. Read more >>
What do you do if you’re a small country, rich in minerals that went from boom to bust when the bottom fell out of the commodities market? Copy Chile, is the answer.
Chile’s experience as a small, copper-dependent economy that prudently stashed cash during the boom years, allowing it to ride out the 2008-09 world economic crash and uncork anti-cyclical spending, was the perfect case study for Mongolia. Read more >>
Chile’s peso has been doing some bodybuilding. Is it time for a cold shower?
Already Latin America’s biggest gainer against the dollar this year and the third biggest winner in the world after Hungary’s forint and Poland’s zloty, the peso firmed another 1 per cent on Friday after the Fed’s announcement of a third round of quantitative easing on Thursday. Read more >>
Is Chile caught in the middle income trap? For Felipe Larraín, finance minister, the sight of buses being burnt on the streets of Santiago is a sign that it is.
“The middle income trap is a concern,” he told journalists on a visit to the FT on Thursday. “There is a point where people feel richer and want things like free [higher] education and free health care. But you have to hold the line.” Read more >>