Chile Business Forecast Report Q1 2015

Business Monitor International
October 18, 2014
53 Pages - SKU: BMI5361168
Countries covered: Chile

Chile Business Forecast Report Q1 2015

Core Views

The Chilean economy will expand at a sluggish pace in the comingquarters, as weaker growth in China and deteriorating businessconfidence weigh on fixed investment. In addition, falling consumerconfidence indicates tepid household spending is ahead.

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

Chile's external account rebalancing will continue in the comingyears, with a weaker exchange rate bolstering the country's goodtrade dynamics. This will see the current account deficit shrink to1.9% 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 from2.5% to 2.0%, and our 2015 forecast from 3.2% to 2.6%, implyinga more substantial drop-off from 4.1% growth in 2013.

We revised down our 2014 average exchange rate forecast fromCLP562.0/USD to CLP573.9/USD, expecting the peso to averageCLP613.7/USD through the remainder of 2014, compared to thecurrent spot price of CLP598.5/USD.



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