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. Continue reading »
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. Continue reading »
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. Continue reading »
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. Continue reading »
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. Continue reading »
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. Continue reading »
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. Continue reading »
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. Continue reading »
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.” Continue reading »
One company’s blunder is another company’s opportunity.
On Wednesday, just as Chilean retailer Falabella announced that its profits were down over the first half of 2012, Swedish retailer Hennes & Mauritz AB, better known as H&M, said it would expand into South America, opening a flagship store in Santiago, Chile, during the first half of 2013. Continue reading »
Brazil and Argentina must be green with envy. Economists are increasingly downbeat on Brazil’s growth, cutting their 2012 forecast again (to 1.75 per cent). Argentina’s latest official data, showing flat activity in June was only good because it was not as bad as expected. And then here comes Chile with expansion of 5.5 per cent in the second quarter and 5.4 per cent in the first half, better than market expectations, and the fourth straight quarter of growth. Continue reading »
Colombia on July shocked the market with an interest rate cut (its first in two years) because of expectations of lower growth ahead. Will Chile follow suit this month?
Bold moves have been something of a hallmark of Chilean central bank monetary policy in the past, but as things stand, the odds are that the bank will sit out on a cut and leave its key policy rate at 5 per cent for a seventh straight month. Continue reading »
Chile got a nice surprise on Friday, in the shape of unexpectedly low inflation numbers. But there was a rather nastier surprise for one its flagship companies, Cencosud: market uncertainty has forced it to slash the size of its upcoming IPO in the US.
Central banks tend spend a lot of time and energy combating inflation, so it must have been an especially pleasant start to the weekend for Chile’s monetary authority to find that inflation was a non-event in May. Continue reading »
Brazil wants to cut interest rates more; Colombia has increased rates three times in the last four months. But Chile looks likely to sit on its hands for now.
That is the signal from the minutes of the February meeting, released on Wednesday, in which it explained its decision to weigh, but reject, a 25 basis point cut from the current 5 per cent. Continue reading »