The economic challenges facing Chile today

In order to evaluate the main economic challenges facing the country today, as well as its relationship with the United States, AmCham Chile has recently held a meeting in which President Michelle Bachelet and Finance Minister Rodrigo Valdés met with representatives from the Chilean public and private sector.

By Alejandra Melo

Chile in the World: Challenges of Growth and Integration in a Global Context was the title of the breakfast meeting recently held by the Chilean American Chamber of Commerce, AmCham Chile. The event brought together Chamber members along with President Michelle Bachelet and Finance Minister Rodrigo Valdés to discuss current challenges and issues related to the national economy.

Participants addressed the economic situation and outlook in Chile, in which President Bachelet and Minister Valdés noted the appearance of small signs of recovery. There was also unanimous support for the Trans-Pacific Partnership (TPP) Agreement and the importance of maintaining good relations with the US.

On this latter point, the President of AmCham Chile, Kathleen Barclay, highlighted the importance of the bilateral relationship between the two countries, which has been described as a strategic treaty between equals by US President Barack Obama. Barclay also described this relationship as one that encompasses a number of areas, including culture, defense, energy, the sciences and economics.

She added that boosting the internationalization of Chilean companies is an essential component of national development, while also stressing the commitment of the Chamber towards the fulfillment of treaties, such as the TPP and Pacific Alliance. In addition, Barclay confirmed the Chamber’s dedication to continue to provide concrete support in Chile to the different reform processes underway, such as those relating to tax, employment, and even the new foreign investment regime.

Furthermore, she thanked those in attendance for the dialogue opportunities that have helped to provide spaces for the generation of thematic proposals, such as strengthening trade flows and foreign investment between Chile and the US. As a specific example of this, Barclay highlighted the drive for the legislative approval of the agreement that ends double taxation with the United States.

Government outlook

Regarding the government, President Bachelet confirmed her administration’s concern for the global economic slowdown, while recalling that Chile remains the most competitive economy in Latin America. She added that although public and economic institutions have not lost their strength, there is indeed a consensus on the need to make them more robust.

She said that the country continues to maintain financial stability and has the macroeconomic responsibility required to guarantee solidity and competitiveness. These latter two pillars, she noted, are key parts of an environment that is conducive to investment, growth and commercial exchange.

President Bachelet also highlighted trade relations between Chile and the US, reaffirming her support for the TPP, which she stated as constituting, “an appropriate balance that will provide benefits to the country and ensure the necessary protection of Chilean interests in the process”.

Minister Valdés announced that the government is working on new measures to boost productivity and invited all actors to devise proposals to this end. He explained that, despite the ongoing economic slowdown, growth has begun to stabilize at around 2.5%, therefore delivering greater dynamism to the economy.

Minister Valdés emphasized that, despite the sharp drop in investment in recent years, there has now been a slight recovery. He pointed out that growth of almost 2% in the first few months of 2016, in conjunction with interest rate stability during a time of currency depreciation and periods of volatility, are signs of greater robustness.

He stressed that business and consumer confidence remains low, adding that, “we need to return to higher levels of confidence in order to boost growth. Businesses are expecting some kind of recovery, but we have to keep working towards that end”.

To conclude the meeting, Minister Valdés and the President of AmCham Chile exchanged views on a number of topics, including the 2017 budget and the changes to the pension system. Finally, the minister called for the members of the Chamber to continue to support Chilean development, particularly by means of exporting services.

The breakfast meeting, Chile in the World: Challenges of Growth and Integration in a Global Context was sponsored by VTR, AES Gener, Freeport-McMoran, Grupo CGE and Level 3.

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