MercoPress. South Atlantic News Agency

Investment banks with upbeat forecast for Chile's economy.

Nineteen Chilean and international banking organizations recently consulted about the world economic growth rates anticipate positive growth in the Chilean economy over the next two years. The organizations predict a solid growth average of 5.2 percent per year.

The American investment bank J.P. Morgan Chase Bank gives the most optimistic outlook. According to its global report, issued May 5, Chile will maintain a steady economic growth of six percent in both 2006 and 2007. The European bank Dresdner Kleinwort has presented a similar prognosis.

Furthermore, both banks predict relatively low inflation during the next few years' economic expansion, with expected annual rates around three percent.

Several Chilean experts agree with the foreign bank prediction's encouraging economic news.

"During the next year it is more probable that the economy will grow at about six percent because the public sector will play a more significant role. Consequently, the possibility of having a much larger public expenditure this year is very high," explains economist Patricio Rojas.

The universal consensus, however, is not quite as optimistic: economic consultancy Gemines and Chilean investment bank LarrainVial see the Chilean economy only growing 4.8 percent in the next two years, while the American bank Merrill Lynch pins economic growth at 4.4 percent.

According to economic consultant Angel Cabrera, Chile's growth figures would be higher if it were not for counterproductive regulatory barriers in the country's labor and tax system.

"With the same external stimulus that we are receiving today, if we had not had this decrease in economic efficiency, then the Chilean economy would be growing not at a rate of six percent, but rather seven or eight percent or even more," contends Cabrera.

By Matt Malinowski The Santiago Times - News about Chile