Chile’s Economy & Challenges for Future Growth

CGTN America / Youtube

CGTN's Rachelle Akuffo spoke to Peter Hakim, president emeritus and senior fellow at Inter-American Dialogue. They discussed the challenges facing Chile's economy and what prospects it has for the foreseeable future.

Comments by Peter Hakim:

“In Chile, we have seen a battle between economists, focused on growth and careful fiscal management, and the politicians, who are worried about groups of voters. The economists wanted investment for mines and the politicians saw the difficulties that this could create with environmentalists and a segment of their followers who care about the environment. They prevailed and the economists lost out. The economists were fed up at the end and they decided that the only thing they could do was to leave.”

“People are now waiting for the election, which is only two months away. The leading candidate is one of Chile’s richest businessmen, so there is not a great deal of worry, and the economy, in fact, seems to be beginning to move up slowly but steadily.”

“For the upcoming elections, there seems to be a clear lead by Sebastian Piñera, who was in the Presidency four years ago. The supporters of the current government have split into two groups, so it is going to be very hard for them to gain the needed 51% to overcome Piñera.”

“The price of copper was falling and now it is beginning to rise again, not surprisingly. Copper is half of Chile’s trade and trade is half of Chile’s income, so that is a big chunk of money. There was some discontent from the business community towards the Bachelet government, which felt she was focused more on distributional issues and less on growth issues. There was also a bad incident of corruption, in which one of her children was tangentially involved, so there is a whole series of things, but I think the price of copper was the main issue.”

“Chile is still doing pretty well compared to its neighbors in Latin America. Chile keeps growing, at a slower pace but keeps growing, and that is not the case of another dozen countries in Latin America.”

“China has become an essential element in the Chilean economy. China started looking at Chile for copper and China is now the largest trading partner for Chile. What is surprising in the last 2-3 years, is that they have begun trading with fruit or wine. So China is opening and beginning to diversify away from copper and into other commodities.”

Watch the full interview here: