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Chile Country Risk Report 20 2018

Chile Country Risk Report 20 2018

Real GDP growth in Chile will continue to gain steam in the quarters ahead, on rising copper output, increased business confidence and strong private consumption. The non-copper sectors of the economy will likely become increasingly important drivers of growth in the years ahead.

Chile's current account deficit will narrow in 2018 as the goods trade surplus widens. In the years ahead, a diversifying export base and strong copper production will support narrowing deficits, while capital inflows stabilise Chile's balance of payments position.

The Chilean peso will gradually appreciate in the years ahead, on stronger economic growth relative to the US and higher average copper prices. However, relatively low real interest rates in the country, a poor policymaking environment and a high real effective exchange rate will limit upside for the currency in the long term. Over the next decade a diversifying export base will reduce the unit's close association with copper prices.

The Banco Central de Chile will enact two rate hikes in 2018, in-creasing the benchmark policy rate by 50 basis points to 3.00% as inflation and economic activity pick up.

Chile's fiscal deficit will narrow in 2018 as an uptick in activity helps to support revenues, while a commitment to fiscal prudence limits spending growth. In the years thereafter, social demands on govern-ment spending will see the deficit gradually widen.


Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
All Signs Point To Robust 2018 Growth
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: GROSS FIXED CAPITAL FORMATION FORECASTS
TABLE: NET EXPORTS FORECAST
External Trade And Investment Outlook
Robust Exports To Narrow Current Account Deficit
Outlook On External Position
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
TABLE: TOP 5 GOODS IMPORTS IN 2016
TABLE: TOP 5 GOODS EXPORTS IN 2016
Monetary Policy
Rates To Rise As Inflation Gains Steam
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Budget Deficit To Widen Post-2018
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Currency Forecast
CLP: Limited Upside In Long Term
TABLE: CURRENCY FORECAST
Chapter 2: 10-Year Forecast
The Chilean Economy To 2027
Strong Fundamentals And Gradual Diversification Support Robust Growth
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Pensions, Taxes, Education Lead Legislative Agenda
Long-Term Political Outlook
Chile's Stability Unlikely To Be Challenged In The Next Decade
Chapter 4: Operational Risk
Operational Risk
TABLE: OPERATIONAL RISK
Business Crime
TABLE: BUSINESS RESPONSE TO WHITE COLLAR CRIME AND ORGANISED CRIME
Education
TABLE: CHILE AND OECD AVERAGE – STUDENT PERFORMANCE SCORES, 2015
Chapter 5: BMI Global Macro Outlook
Trade Tensions Take Centre Stage
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: CHILE – MACROECONOMIC DATA & FORECASTS

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