Chile

2 Chapter Investment Environment

    • GDP and GDP Growth Rate

      Present state of business environment 2019.
      Chile is the 42nd largest export economy in the world and the 61st most complex economy according to the Economic Complexity Index (ECI). GDP growth has been mainly boosted in 2019 by the services sector namely personal services, real estate and business. According to the World Bank Chile's economy is recovering from years of low commodity prices that relied on higher consumption and private investment, increasing wages, lower interest rates, private-sector confidence, higher copper prices, growing mining production, and on increased wholesale trade and commercial services. Chile has made changes to make it easier for companies to start a business in the country, such as introducing electronic systems for accounting by replacing  the  requirement  to  print  and  present  sealed  accounting  books  and  invoices  to  the  Internal  Revenue  Service and  enforcing  contracts  easier with an e-system that allows plaintiffs  to  file  the  initial  complaint  electronically.

      GDP and growth rate.
      Chile´s GDP was worth 298.20 billion USD, the annual growth grew 1.9 year-on-year in the second quarter of 2019 and the GDP per capita last rate was in 2018 at 15130.20 US dollars.

      Chile´s GDP 2018.
       
       
       


       

    • Finance and External Debt

      Finance and external debt.
      Chile´s external debt increased to 193992.73 USD Million in June of 2019 from 189812.28 USD Million in May of 2019 and government debt is equivalent to 25.60% of the country's Gross Domestic Product in 2018.
       
      Stock Market Exchange.
      The Santiago Stock Exchange General Index (IGPA) tracks the performance of the majority of stocks traded on the Santiago Stock Exchange, it is a capitalization-weighted index with a base value of 100 as of December 30, 1980. The Santiago Stock Exchange General Index decreased 2403 points or 9.23% since the beginning of 2019, according to trading economics from a contract for difference (CFD) that tracks this benchmark index from Chile.

      Stock level relative to the United States.
      The Latest stock market rate in 2019 for the United States was of 25,628.90 points and Chile in 2019 is at 23,637.94 points.



       

    • Trade

       
      Chile recorded a trade deficit of 29 million USD in July of 2019 compared to a 278 million USD surplus in the same month of 2017. In 2017, Chile exported $ 70.1 billion and imported $ 62.7 billion, resulting in a positive trade balance of $ 7.48 billion. Of services exported Chile gain 9.5 billion USD in 2016. Chile's three main export partners are China, the United States and Japan, while its main importers are the United States, China and Brazil. Chile is part of 21 Free Trade Agreements, covering 60 nations, of those FTAs, the largest eight constitute 85.36% of Chile's total trade activities.

      Exports.

      Chile had 75.5 billion USD of products exported in 2018.

       

       


      Imports.
      Chile had 74.2 thousand million USD of products imported in 2018.
       
       


       


       

       

    • Industry trends.

       Chile’s key activity sectors include mining (copper, coal and nitrate), manufactured products (food processing, chemicals, wood) and agriculture (fishing, viticulture and fruit). The industrial sector in Chile contributed 29.96% of GDP in 2018 and employed 22.74% of the working population, according to the World Bank.
       
       
      Mining.
      GDP From Mining in Chile increased to 3727.95 CLP Billion in the second quarter of 2019. Chile is the world’s number one producer of copper, iodine, molybdenum, and rhenium, the mining sector provides the 10% of Chile's GDP, the mining of other resources such as iron, molybdenum, nitrate, gold and silver is also important. Copper produced in 2016 5.55 million tons of copper, which represented 27.6% of the world’s production, in that same year Chile produced 37% of the world’s lithium.  The Mining sector is present in 13 of the 15 regions of the country, and extracts 25 different products, mainly in the regions of Tarapaca, Antofagasta and Atacama and is of great importance in the Coquimbo, Valparaiso and O’Higgins regions. The United States is the single largest mining parts and equipment supplier to Chile, with about 30% market share.
       
       

      Manufacturing.

      GDP From Manufacturing in Chile increased to 4053.39 CLP Billion in the second quarter of 2019. The industrial sector contributes around 33% of Chile's GDP. the key activity sectors include mining with copper, coal and nitrate, manufactured products with food processing, chemicals, and wood, and agriculture with fishing, viticulture and fruit. In the last decades, Chile has been exporting mineral resources, specially nitrates, which are used in the fabrication of fertilizer, and then copper, but now the country has been looking to diversify exportation by adding manufactured goods such as agricultural and food, chemical products, cement, wood and paper.
       
       

      Foreign Direct Investment.

      According to the "2018 World Investment Report by United Nations Conference on Trade and Development (UNCTAD) Foreign direct investment flows decreased for the third consecutive year, FDI inflows fell to USD 6.7 billion in 2017. This decline is mainly due to a gradual degradation of copper ore laws, tense labor relations and the increase in labor costs. Investment is mainly for mining, finance, insurance, transportation, energy and manufacturing.
       
       
       

      By industry.

       
      By country.

       

    • Infrastructure.

       The World Economic Forum´s report "The global competitiveness report 2017-2018" puts Chile into the following rankings in their comprehensive evaluation of infrastructure. 
       
      Roads.
      In Chile there is a system of different roads and routes, there are four so-called longitudinal roads, among the longitudinal roads is the Pan American Route 5, which extends from the border with Peru and Arica, in the extreme north of Chile, to Quellón, al South of the country, in the Chiloé archipelago, crossing the most important cities of the territory. The total amount of roads in 2016 was 77,801 km, traffic is mainly controlled by Carabineros de Chile with radars, drive on the right and the seat belt is mandatory. The maximum speed allowed in urban areas is 50 km/h, on highways is 100 km/h and 80 km/h, and on roads the limit is 100 km/h.
       
       

      Railways.

      The total route length of the railway network and of its component parts by gauge was 7,282 km in 2014, with a narrow gauge of 3,853.5 km 1.000-m. a broad gauge of 3,428 km 1.676-m gauge (1,691 km electrified).
       
       

      Ports.

      Ports and terminals: The major ports and terminals are the Coronel, Huasco, Lirquen, Puerto Ventanas, San Antonio, San Vicente, Valparaiso, primarily based on the amount of cargo tonnage shipped through the facilities on an annual basis. The main container ports (TEUs) are San Antonio (1,296,890), Valparaiso (1,073,734), and the main LNG terminal for imports is in Mejillones, Quintero.
       
       

      Airports.

      Chile has 481 Airports, 90 have paved runways and 391 are unpaved. The total number of registered air carriers by 2015 was 9, with an inventory of 173. The annual freight traffic on registered air carriers in 2015 was 1,392,236,000 mt-km.
       
       

      Transportation.

      Common transportation in Chile includes buses, trains, airplanes, taxis and collectivos (taxis that run a fixed route). And Santiago city, has a metro system, but is more expensive compared to busses.
       
       

      Distribution costs.

      Pricing in Chile is based on CIF value, costs plus constant ship-to-warehouse expenses.  Gross margins for consumer goods are generally 30-50% or more for direct sales to consumers, or 20-30% each for the importer or distributor and the retailer when a distribution chain is in place. Prices in most locations, including retail stores and restaurants, are quoted to the consumer with the IVA included.