Weekly Report - 5 February 2009 (ISSN 1741-7422)

CHILE | Fiscal surplus. Chile posted a fiscal surplus of US$9bn in 2008, the equivalent of 5.2% of GDP. There was no surplus in the final quarter, however, due mainly to the sharp fall in the price of copper. The fiscal surplus was 8.7% of GDP, or US$14.45bn in 2007. The budgetary committee is predicting a fiscal deficit of 2.9% of GDP in 2009. Mining production fell 9.2% in December and 5.4% for 2008 as a whole, according to the national statistics institute (INE). Industrial production fell 3.7% year-on-year in December, closing 2008 with an increase of just 0.2%, compared to 4.1% in 2007. On the plus side, voters have been impressed with the government's handling of the global economic crisis. President Michelle Bachelet's approval rating climbed two points to 53.1% in January, its highest monthly level in two years, according to local pollster Adimark: it has been on an upwards trajectory since September.

BRAZIL | Investment. The chief of staff, Dilma Rousseff, this week announced a 66% increase to R$1.14trillion (US$500bn) in the growth acceleration programme (PAC). Critics pointed out that the government only invested 60% of its share in PAC projects last year (the PAC is based on joint investment initiatives between the government, state-owned companies and the private sector), and that since its launch two years ago only 11% of projects have been concluded or are on schedule. The global financial crisis has cut credit lines for many Brazilian companies, which have now cancelled billion-dollar projects announced last year. Economic analysts are forecasting a fall in investment rate of growth to around 3% in 2009, from 10% last year and in 2007.

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