The eM Safe haven
In the aftermath of the credit crunch and with the global recession taking its toll on Latin America,
we believe Chile stands out as a safe haven among emerging markets, reaping the benefits of a
stable business environment and years of prudent economic policies. Indeed, in the Q309 Chile
Business Forecast Report we assess the country’s macroeconomic fundamentals and make our
case for Chile being one of the few contenders in the region to avoid a full-year recession. The
country stands to benefit from an increasingly constructive outlook on global commodity prices,
particularly copper, and growing investor confidence in local assets, which should keep the finan-
cial system relatively well-cushioned against another bout of volatility and a return of risk aversion
down the line. Though we still envision a change of government by the end of the year, the ruling
Concertación de Partidos Por la Democracia (CPD) will be happy to play these credentials up
ahead of December’s general election.
The Chilean political landscape is rapidly changing in the run-up to December’s general election.
With President Michelle Bachelet constitutionally barred from another consecutive presidential
term, the desire for change is ringing loudly among the electorate. Long-standing divisions in the
ruling CPD are reaching boiling point as Bachelet’s administration comes to an end, and the one
factor previously uniting CPD members – hostility towards former Chilean dictator Augusto Pinochet
– is hardly any great importance to voters faced with a sharp economic slowdown. Therefore, we
continue to put our money on opposition leader Sebastián Pinera to succeed Bachelet following
December’s poll.
Though Latin America’s fifth-largest economy has long set itself apart from its regional peers on
matters of political stability, market openness and established financial markets, in recent years
prudent and well-timed economic policies have placed Chile in a league of its own to deal with the
global recession. Expanding at a less robust pace and competing from a relatively higher foreign
investment base than most of its neighbours, Chile’s strong macro fundamentals and political
stability may not have been at the forefront of investors’ interests during the years of abundant
financial market liquidity and asset price inflation. However, with the global economy slipping into
its most challenging period in the post-World War II era, and Latin America set to contract by 2.%
in 2009, Chilean assets have once again become one of the top picks for investors since the start
of this year.
Operators in Chile’s telecoms markets have said more spectrum needs to be auctioned in order
to keep up with the rising demand for mobile broadband services. The request came from both
wireless and wireline operators at a roundtable discussion to celebrate World Telecommunications
Day. Regulator Subtel has already said that mobile broadband connections could overtake fixed
broadband connections by 2012, and there is a general agreement that mobile broadband is key