Free Submission Public Relations & NewsPR-inside.com
Home
Deutsch English

Finance
Chile Business Forecast Report Q2 2014

Chile Economy: New country economic figures released


Print article Print article
© companiesandmarkets.com

companiesandmarkets.com
companiesandmarkets.com
2014-04-03 07:34:01 - Chile Business Forecast Report Q2 2014 - a new country guide report on companiesandmarkets.com

Core Views We believe that weaker fixed investment amidst mounting external headwinds – namely, cooling external demand from China for copper – will negatively affect real GDP growth in Chile in 2014. That said, we expect that expansionary fiscal and monetary policies by the Chilean government will provide some support for the economy, underpinning our forecast for headline growth of 4.2% in 2014, only slightly down from estimated growth of 4.3% in 2013.

S lowing economic growth will prompt the Banco Central de Chile (BCC) to continue its ongoing monetary easing cycle in 2014, cutting the benchmark policy rate by 50 basis points to 4.00%. While we forecast higher average consumer price inflation in 2014, we do not expect inflation to

 

 

accelerate significantly above the BCC´s 3.0% year-on-year target, providing the central bank with ample leeway to maintain its dovish policy orientation. However, we note that the risks to our forecast lie primarily to the downside.

We expect the Chilean peso to depreciate in the coming months, as a weak economic growth outlook, the prospect of continued monetary easing by the Banco Central de Chile (BCC), and rising interest rates in developed markets place downside pressure on the exchange rate. Indeed, we forecast the peso to average CLP539.00/US$ in 2014, implying further weakness from CLP532.32/US$, where the unit is trading at the time of writing.

Michelle Bachelet´s return to the Chilean presidency in 2014 will pave the way for a highly ambitious reform agenda, which seeks to raise taxes and introduce higher-quality free education in the country. However, due to an insufficient parliamentary majority, we believe that the centre-left coalition will need to compromise on reforms, ensuring that Chilean politics will not veer too far left over the coming years.

Major Forecast Changes While Chile´s external accounts will remain under pressure from weakening external demand from China for industrial metals exports, we believe that 2014 will see a narrowing of the country´s current account deficit to 2.3% of GDP – a revision from our prior forecast of 3.1% – from 3.2% of GDP in 2013.

Key Risks To Outlook We note that risks to our trade forecasts are weighted to the downside, as even with a below-consensus forecast for Chinese real GDP growth of 7.1% in 2014, persistent port strikes and delays in copper exports provide a high degree of uncertainty and could mean that our outlook for exports is overly optimistic.

The main risks to our 2014 real GDP growth forecast lie to the downside. For example, should we get more specification that Chilean projects figure prominently in Vale and Rio Tinto´s cost reduction plans, we could be encouraged to revise down our 2014 GFCF forecast, which would have important knock-on effects for our 2014 real GDP growth forecast. Moreover, the Chilean government will be limited in the amount of fiscal stimulus it can employ by laws that require the structural fiscal account (which is tied to the price of copper and cyclical components of GDP) to be balanced.

Click for report details: www.companiesandmarkets.com/Market/All-Sectors/Country-Guide/Chi ..

Browse all All Sectors Country Guide Reports www.companiesandmarkets.com/Market/All-Sectors/Country-Guide?aCo ..

Browse all All Sectors Company Profile Reports www.companiesandmarkets.com/Market/All-Sectors/Company-Profile?a ..

Browse all Latest Country Guide Reports www.companiesandmarkets.com/Market/All/Country-Guide?aCode=f3fb3 ..

About Us
Companiesandmarkets.com is a leading online business information aggregator with over 300,000 market reports and company profiles available to our clients. Our extensive range of reports are sourced from the leading publishers of business information and provide clients with the widest range of information available. In terms of company profiles, Companiesandmarkets.com’s online database allows clients access to market and corporate information to over 100,000 different companies. We provide clients with a fully indexed database of information where clients can find specific market reports on their niche industry sectors of interest.


Author:
Mike King
e-mail
Web: www.companiesandmarkets.com
Phone: London: +44 (0) 203 086 8600

Disclaimer: If you have any questions regarding information in these press releases please contact the company added in the press release. Please do not contact pr-inside. We will not be able to assist you. PR-inside disclaims contents contained in this release.
Latest News
Read the Latest News
www.newsenvoy.com

 


Terms & Conditions | Privacy | About us | Contact PR-inside.com