Chile: Growth to recover from the fall in copper prices

12/12/2016 - Report
ic_blogtagChileCountry RiskGrowthPolitical RiskPrice

​Euler Hermes expects the economy to decelerate to +1.7% in 2016, after +2.3% in 2015. This is an expansion rate far below the 2010-2013 +5.3% average. Exports will continue to suffer as the international price of copper and national production levels remain in negative territory. 


The economic slowdown, a controversial reform agenda, the increase of the corporate tax rate from 20% in 2014 to 25% by 2018 and the end of corporate tax breaks have an aggregate impact on business and consumer confidence. 


Companies’ local and external financing conditions have deteriorated. On the back of increasing inflation, the Central Bank tightened its monetary policy from February 2015 to February 2016. Meanwhile, the CLP has fallen by -17% against the USD since June 2014. The result was financial distress in some import-oriented sectors. 


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