Business confidence mars Chile investment outlook

Subject

The impact of falling investment.

Significance

Since 2013, investment has been declining in many Latin American countries in a trend related to lower commodity prices. However, in Chile, the contraction has been particularly marked and is also attributed to a loss of business confidence caused by domestic political factors.

Impacts

• An expected increase in international interest rates will play against higher private investment next year.
• Increased competitiveness as a result of peso depreciation may boost investment in some non-commodity export industries.
• Local businesses, accustomed to Chile's economic and political stability, will find it difficult to adjust to increased uncertainty.