major macro economic indicators
|2014||2015||2016 (e)||2017 (f)|
|GDP growth (%)||1.8||2.3||1.8||1.8|
|Inflation (yearly average) (%)||4.3||4.3||3.9||3.0|
|Budget balance (% GDP)||-1.5||-2.1||-3.1||-2.8|
|Current account balance (% GDP)||-1.2||-1.9||-2.1||-2.0|
|Public debt (% GDP)||15.1||17.5||20.3||23.3|
(e) Estimate (f) Forecast
- Mining (leading copper producer), agricultural, fishery and forestry resources
- Numerous free-trade agreements
- Favourable business climate, political and institutional stability
- International companies operating in distribution, air transport and paper
- Member of the OECD and the Pacific Alliance
- Open economy, vulnerable to external shocks
- Dependence on copper and the Chinese economy
- Persistent external deficit
- Vulnerability of the road network and electricity grid, and high energy prices
- Exposure to weather and earthquake risks
- Income disparity and poor education system
Resilient growth in 2017
In 2016, lower production and weak copper prices dampened growth The country traditionally depends on the primary sector, specifically the extraction of copper, which accounts for almost half the country's exports. This trend is likely to continue in 2017. Exports of copper are nonetheless likely to benefit from the expected rise in prices, but gains will be limited by weak Chinese demand (largest customer). Private business investment in the mining sector is expected to remain weak, unless demand for metals (copper, in particular) rises again, subject to the infrastructure programme planned by the new US president being implemented. Investment by public-sector mining companies is likely to decline due to continued government efforts to contain the rise in spending and the priorities granted to non-mining sectors. Household consumption is nonetheless likely to remain dynamic, buoyed by the increase in social spending (housing, healthcare, education subsidies) included in the 2017 budget, despite higher unemployment. The expected fall in inflation is expected to boost household purchasing power and enable the central bank to ease its monetary policy.
Cautious management of the public accounts
In 2016, Chile's public deficit worsened, hit by weak revenues (taxes and duties) from the mining sector, while non-mining tax receipts also declined on the back of the slowdown in activity. Spending remained high, despite the government's efforts, as these were not sufficient to offset the shortfall in revenues. Although President Bachelet has postponed his objective of eliminating the public deficit by 2018, his administration seems determined to cut spending growth over the next few years. The 2017 budget also provides for a 2.7% increase in spending compared with 2016, which is the smallest increase since 2003. The major part of the budget is likely to be devoted to social spending (healthcare, education, security) to the detriment of spending on infrastructure. The government's draft budget also provides for recourse to borrowing, specifically the use of bond issues to finance the deficit in the public accounts in 2017. This will contribute to an increase in the public debt, which will nonetheless remain fairly low.
The current account deficit is resilient, despite the expected increase in copper prices.
With regard to the external accounts, Chile's current account deficit is expected to remain stable. The trade balance is likely to benefit from the expected increase in copper prices, but weak Chinese demand will limit any gains. The rise in the price of imported oil, though modest, will also prevent a faster reduction in the current account deficit. Despite the tourism revenues, trade in services is likely to remain in deficit, while the transfer balance is expected to remain slightly positive, thanks to remittances from expatriate workers which are higher than remittances back home by foreigners working in Chile. Dividend repatriation by foreign companies, particularly in the extractive industries, is expected to continue, but outflows are likely to be lower, because of the drop in profitability of companies in the sector.
The opposition is expected to win the 2017 presidential elections
The next presidential and parliamentary elections will be held in November 2017. President Michelle Bachelet, previously serving as president from 2006 to 2010, and re-elected in 2013, is not likely to stand again as under Chile's constitution an outgoing president is not allowed to stand. The coalition of right-wing parties (Chile Vamos), which won the 2016 municipal elections is favourite to win, while President Bachelet's left-wing New Majority coalition (Nueva Mayoría) is losing popularity. The administration's reform priorities, including the raising of corporate tax, have hit business confidence, contributing to a fall in investment and activity, already affected by weakness in the mining sector. The corruption scandals surrounding those close to the president and arguments between some of the coalition parties and the cabinet have led to historically low approval ratings for the president.
Nonetheless, the business climate remains favourable. Chile's stable institutions and business-friendly regulations mean the country will continue to be attractive for foreign investors.
Last update: January 2017
The promissory notes, checks and bill of exchange are frequently used for commercial transactions in Chile. In the event of default, it offers creditors certain safeguards, including access to the summary proceeding (Juicio Ejecutivo) under which, based on his appraisal of the documents submitted, a first instance judge (Juzgado Civil)may order a debtor to pay at the moment of the notification or his property will be attached. Some of these documents need a previous step at court to get this legal force.
Widely accepted though somewhat difficult to obtain, bill of exchange guaranteed by a bank limits the risk of payment default by offering creditor additional recourse to the endorser of the bill.
The check, which is most used than the bill of exchange or the promissory note , offers similar legal safeguards under summary proceeding (Juicio Ejecutivo), in the event of unpaid for a cause (protesto) of not founds or account closed. Also be recorder at a public registers (Boletín Comercial)
The same is true of the promissory note (pagaré), which, like bill of exchange and check, is an instrument enforceable by law and, being unpaid, is also recorded at Boletín Comercial. The promissory note needs to be protested (protestada) by a public notary or in a judicial trial.
An outgrowth of the Boletín Comercial provide to other information companies (such as Dicom, SIISA) about the unpaid debt registered at the national level, but Boletín Comercial is the official and most important company at national level under the dependence of the Santiago Chamber of Commerce (Cámara de Comercio de Santiago) . Commercial companies and private persons are recorded and where banks and other deposit and commercial institutions can check a company or person’s payment record before extending credit or a commercial transaction.
Electronic transfers via the SWIFT network, widely used by Chile banks, are a quick, fairly reliable, and cheap instrument, provided the purchaser, in good faith, orders payment.
Collection begins with amicable collection process (non judicial intervention yet). Once NOA is received, debt collection will proceed to contact the debtor, the objective is that the parties can agree about a payment settle or a payment plan.The time of this amicable phase depends on if the parties have agreed on a settle or a payment plan within the 60 days following the presentation of NOA, if there is no agreement, debt collection will proceed to transfer the case to an external law office where legal actions will begin in order to avoid the prescription of the documents that support the debt (check, invoices, promissory note, bill of exchange).A formal notice served by recorded delivery letter is send inviting the debtor to pay. The principal amount increases according to the interest set by the parties in case of not complying due date.
Barring special clauses included in the commercial contract, the applicable rate is the” interés máximo convencional” regulate by the law number 18.010 obtained from a estimated since 2000 for operations on national currency of 90 days or less or under 200 UF (unidades de fomento)
Annually, the Central Bank publishes the rate thus determined in theDiario Oficial del Estado.
Where there is a lack of settlement agreement with the customer, the creditor will initiate a legal collection process by reference to the law on civil procedure (Código de Procedimiento Civil) which came into force since 1902.
Besides the summary proceeding (Juicio Ejecutivo) a seller unable to settle with a buyer out of court may enforce his right to payment through the civil procedure , divided into ordinary proceedings (Juicio Ordinario)or extra summary proceeding (Juicio Sumario) depending the amount of claims and the type of documents that support debt .
The claimant has to explain the facts on which he exercises its right and to support all case documents, in original or certified copies, when he files its initial petition. After the presentation, judge decides to accept or not the action initiated. If accepted, the trial begins with times depending type of the procedure.
Any juridical action needs a barrister or solicitor (lawyer) even if it is minor court (Juzgados – primera instancia) or superior court (Corte Apelaciones o Suprema- segunda instancia ) where the debtor is located.
Debtor can disputes the ruling with motivated arguments that law contains at the Código de Procedimiento Civil (excepciones) such as payment of debt, prescription, compensation, etc. Judge will observe those arguments and initiate a parallel trial about the defence.
The duration of a trial can take to 6 month to 2 years or more depending of the document, debtor defence and if an appeal action has being executed.