Friday, September 02, 2005
economics and politics
Chile is moving toward its next presidential election on december 11th like a mature democracy. The economics scenario is quite promising even though oil prices increases are a threat which to count on. Sure ,the copper prices are at the highest level in years(since 1988),and the expectation is that high prices will continue at least for the next year. Private investment this year is growing strong at a 27% annual rate , domestic demand also is surging at an annual rate of 9.8%,and inflation is on line with Autonomous Central Bank projections according with its recent monetary report(www.bancocentral.cl) September 2005). So, the Chilean economy looks pretty well for investors looking for opportunities abroad . Corruptions level are low ,the country ranked 18th on the organization’s corruption index in 2001 (with the U.S. ranking 16th). On the same index, Chile ranked first among Latin American countries.and there is a climate of political and social stability which is in a sharp contrast with the reality in other Latin American countries. Recently in a forum organized by The newspaper “La Nación” in Buenos Aires , Argentina, (www.lanacion.com.arg) the Chilean economy was called the “Boutique economy”, suggesting a selective list of investment opportunities. The aggregate cost tough, both in the seventies and eighties, has been high enough to create strong incentives to keep the pace of growth with stability .
The next Presidential election, to be held on December 11th,is on schedule like a political event which goes on without interfering the economy. The IMF(www.imf.org) in its recent report (September 2005),says : “Political consensus in Chile on the macroeconomic framework remains very strong. All the main candidates have reaffirmed their commitment to fiscal prudence, inflation targeting, and trade openness”.
In a recent business polls, only 9% of those who were interviewed ,responded that they were postponing investment decisions because of political uncertainties, the other 91 % are looking for new business opportunities creates by Chilean economic growth, expected to be between 6 - 6.5 % this year ,and 5 ¼ -6 ¼ for 2006.
This situation is rather unusual for the standard in Latin America, where there is still a debate between different approaches to the economy concerning for instance to the role of State ,the law, the markets and regulations to private firms. Chile has evolved to a moderate political path based on consensus, and the rule of law . This does not mean a static society, but one which moves forward based on a sort of an implicit contract between voters and elected government officials .So far, it looks like this contract has worked out properly. Most opinions polls ,show that the probability of a second center left government, following actual President Lagos´s government is high, and quite on the contrary to what someone can expect,. center left in Chile actually mean a market orientation economy.-