Chile Information Technology Report Q3 2012

BMI View: Chilean IT spending is expected to reach US$3.5bn in 2012, up 13%, with BMI's forecast unchanged in US dollar terms, despite an expected economic moderation. Chile's IT market is one of the most developed in Latin America and the Chilean government's commitment to high growth should continue to keep IT spending on an upwards trajectory, with BMI envisaging that Chilean GDP per capita will double in US dollar terms by 2019.

Headline Expenditure Projections Computer hardware sales: US$1.4bn in 2011 to US$1.5bn in 2012, +13.0% in US dollar terms. Forecast in US dollar terms unchanged due to stronger than expected retail sales growth in H211. Software sales: US$445mn in 2011 to US$516mn in 2012, +16% in US dollar terms. Forecast in US dollar terms unchanged but will depend on the success in bringing down illegal software use, which at 64% is higher than in some regional neighbours such as Mexico.

IT Services sales: US$1.3bn in 2011 to US$1.5bn in 2012, +16.0% in US dollar terms. Forecast in US dollar terms unchanged with strong sectors including utilities, financial services, government, telecoms, mining, retail and distribution.

Risk/Reward Ratings: Chile's score was 61.78 out of 100.0. Chile ranks fifth in our latest RRR table, behind the US, Canada, Brazil and Mexico. The country also ranks fifth for its Industry Rewards score, behind Canada and Mexico, but its overall rating was boosted by a relatively high Country Rewards score.

Key Trends & Developments.

Chile's development as an offshoring location will attract more investment in IT services, with sectors such as retail, distribution, financial services, telecoms and healthcare offering opportunities. Mining is also a sector attracting increased vendor attention. Major multinationals such as General Electric and JP Morgan have proceeded with plans to establish service centres in Chile.

Declining exports comb ined with more subdued private consumption and fixed investment will weigh on the IT market in 2012. However, with ample fiscal and monetary politicy ammunition at the disposal of the Chilean authoriites, we expect consumer spending to hold up relatively well.

Many of the government's ICT development plans and programmes are still in a nascent stage and their ultimate effectiveness is yet to be determined. While Chile can boast relative strength in some areas, such as telecoms infrastructure, it has been relatively weak in terms of investment in enterprise IT.