Brazil & Southern Cone - February 2012 (ISSN 1741-4431)

The central bank reported that the economy expanded by 5.3% in December 2011, according to the Índice Mensual de Actividad Económica (Imacec), which covers over 90% of the economy. This was over one percentage point better than the local economic consensus of 4.2% growth. The sectors which grew fastest were commerce, communications and mining.

Dollar problems: The US dollar has fallen by about 10% against the Chilean peso this year to hit Ch$479 in mid February. Last year the central bank intervened heavily to prevent the peso soaring. Foreign exchange trades expect the central bank to introduce new measures if the dollar weakens to Ch$460.

Trade: According to the economy ministry, 93% of the country’s exports now go to markets with which Chile has free trade agreements (FTAs). Chile has 21 such agreements with 58 countries. These deals cover 63% of the world’s population. China is now Chile’s biggest single market, accounting for 22% (or US$17.9bn) of its total exports. Export sales to China, however, were up just 3.3% in 2011. Mineral exports accounted for US$15.9bn of the sales to China.

The European Union  (EU) is Chile’s second biggest export market, with 18%, followed by the US and Japan, with 11% each. Latin America accounted for US$14.5bn of Chilean exporst in 2011, up 14% year-on-year.

Likewise, 89% of Chile’s imports come from countries with which Chile has a trade agreement. The US remains Chile’s biggest supplier, accounting for 20% of its imports. China is second with 17%, followed by the Mercosur with 16%.

Drought: Water levels in the country’s dams are now at only 59% of their usual January levels, according to the Dirección General de Aguas.  The minister of public works, Laurence Golborne, noted that the county had been suffering from a drought since 2010. January is usually the peak month for the use of water for agricultural irrigation. Water levels at irrigation dams are 21% below their usual January levels, while levels at hydro-electric dams are only 9% down, he reported.