Trade in Chile has been stable and thriving over the past several years. Is it going to stay this way and what issues surround doing business in Chile? Let’s explore to find out about the economy and trade markets in Chile.
Today, Chile is one of South America’s most stable and prosperous nations and a recognized middle power, according to the UN.It leads Latin American nations in human development, competitiveness, income per capita, globalization, economic freedom, low perception of corruption and state of peace, as mentioned by the UN Development Program. It also ranks high regionally in freedom of the press and democratic development. However, it has a high economic inequality, as measured by the Gini index. In May 2010 Chile became the first South American nation to join the OECD. Chile is a founding member of both the United Nations and the Union of South American Nations.
Sound economic policies, maintained consistently since the 1980s, have contributed to steady economic growth in Chile and have more than halved poverty rates, according to the CIA World Factbook. Faced with an international economic downturn the government announced a $4 billion economic stimulus plan to spur employment and growth, and despite the global financial crisis, aimed for an expansion of between 2 percent and 3 percent of GDP for 2009. Nonetheless, economic analysts disagreed with government estimates and predicted economic growth at a median of 1.5 percent, as reported by Reuters. According to the CIA World FactBook, the GDP contracted an estimated ?1.7% in 2009. 2006 was a record year for Chilean trade. Total trade registered a 31% increase over 2005. During 2006, exports of goods and services totaled US $58 billion, an increase of 41%. This figure was somewhat distorted by the skyrocketing price of copper. In 2006, copper exports reached a historical high of US $33.3 billion. Imports totaled US $35 billion, an increase of 17% compared to the previous year. Chile thus recorded a positive trade balance of US $23 billion in 2006, according to the Library of Congress. The main destinations for Chilean exports were the Americas (US $39 billion), Asia (US $27.8 billion) and Europe (US $22.2 billion). Seen as shares of Chile’s export markets, 42% of exports went to the Americas, 30% to Asia and 24% to Europe. Within Chile’s diversified network of trade relationships, its most important partner remained the United States. Total trade with the U.S. was US $14.8 billion in 2006. Since the U.S.-Chile Free Trade Agreement went into effect on January 1, 2004, U.S.-Chilean trade has increased by 154%. The increase in trade has allowed many other sectors of the Chilean economy to develop as well.
Chile’s financial sector has grown quickly in recent years, with a banking reform law approved in 1997 that broadened the scope of permissible foreign activity for Chilean banks. The introduction of these new products has also been accompanied by an increased use of traditional instruments such as loans and credit cards. Chile’s private pension system, with assets worth roughly $70 billion at the end of 2006, has been an important source of investment capital for the capital market. However, by 2009, it has been reported that $21 billion had been lost from the pension system to the global financial crisis, according to Global Post. Tourism in Chile has experienced sustained growth over the last few decades. In 2005, tourism grew by 13.6%, generating more than 4.5 billion dollars of which 1.5 billion is attributed to foreign tourists. According to the National Service of Tourism (Sernatur), 2 million people a year visit the country. The Global Competitiveness Report for 2009-2010 ranks Chile as being the 30th most competitive country in the world and the first in Latin America, well above from Brazil (56th), Mexico (60th) and Argentina which ranks 85th.The Ease of doing business index created by the World Bank lists Chile as 43rd in the world that encompasses better, usually simpler, regulations for businesses and stronger protections of property rights.
Overall, Chile looks quite promising in terms of doing trade or business in. With a population of 17,248,450, according to a 2011 government census and a $243.049 billion as estimated in nominal terms by the IMF in 2011; the Chilean market looks quite promising. While GDP per capita is somewhat low at $13,970, as measured by the IMF, the market still looks poised to grow into the future. Chile is still in many ways an emerging market, that has provided investors with many of the things that are necessary for them to prosper in a country’s economic environment. To find out more about doing business in Chile, you can visit (http://www.chileangovernment.cl/invest-in-chile/)