After our visit to Quintana’s Barber shop and learning more about Chile’s past of dictatorship and current successful economic landscape, I decided to do some research on economic indicators to learn in deeper detail what is happening with the country and why it is considered safe haven for international investors. Chile has a very stable business environment, currently the best in Latin America. In February 2016, the country unemployment rate was a low 5.80 percent (see Chile Inflation Rate graph below); the “Labour” Force institute expects a further reduction of 20 basis point until the end of the year. In addition to a low unemployment rate, Chile also has both the lowest inflation and interest rates in Latin America. In January 2016, the national institute of statistics from Chile released an inflation rate of 4.8 percent, the highest since August 2015 (in the sixties inflation was in the high three digits mark).
Chile has been doing a good work, the recent elected President (Michelle Bachelet) is considered a moderate – center and is pushing for business friendly laws and making exportations easier, Chile was the first Latin America country to join the OECD (Organization for Economic Co-operation and Development). Chile also has stable credit markets and a strong stock exchange (Santiago Stock Exchange), because of a moderate and stable monetary policy combined with a dynamic economy Chile has a high-grade credit rating by all rating agencies (S&P: AA-; Moody’s: Aa3; and Fitch: A+). Although, Chile has strong economic indicators the country faces challenges in how to depend less in commodities and to attract intellectual capital. In my opinion to develop a dynamic economy, Chile needs to 1) adjust fiscal policy (the country has a double taxation on income for Private Equity Investors and a very high sales tax – currently at 19%), 2) develop flexible labor laws, 3) fight corruption, 4) find ways to attract private capital to invest in infrastructure and 5) further develop a financial sector.
Chile has been doing a good work, the recent elected President (Michelle Bachelet) is considered a moderate – center and is pushing for business friendly laws and making exportations easier, Chile was the first Latin America country to join the OECD (Organization for Economic Co-operation and Development). Chile also has stable credit markets and a strong stock exchange (Santiago Stock Exchange), because of a moderate and stable monetary policy combined with a dynamic economy Chile has a high-grade credit rating by all rating agencies (S&P: AA-; Moody’s: Aa3; and Fitch: A+). Although, Chile has strong economic indicators the country faces challenges in how to depend less in commodities and to attract intellectual capital. In my opinion to develop a dynamic economy, Chile needs to 1) adjust fiscal policy (the country has a double taxation on income for Private Equity Investors and a very high sales tax – currently at 19%), 2) develop flexible labor laws, 3) fight corruption, 4) find ways to attract private capital to invest in infrastructure and 5) further develop a financial sector.