MercoPress. South Atlantic News Agency

Economists stress caution as Chile enjoys boom

Three leading Chilean economists worried last week that unless the government proceeds with caution, the boom years the country is now experiencing could turn to bust.

Ex Finance Minister Rolf Luders, and economists Gert Wagner and José Diaz, noted that 2006 will mark the fourth consecutive year of sustained economic growth, and that the current economic boom is the best the country has seen in the past 25 years.

In the last 179 years there have been only six other periods with similar sustained growth, they said, and only three times did the economic boom last more than five years. If the economy grows this year by the anticipated four percent, it would make the 2003-2006 cycle among the top ten growth periods ever sustained by the country.

The economists stressed that the government should remain fiscally conservative. "All government expenses should be covered by its earnings," insisted Luders.

The three economists analyzed statistics dating back to 1827. The most recent comparative boom was from 1977 to 1980. But statistics show that very few booms have lasted for more than two years. Furthermore, the booms were frequently followed by very lean years.

The economists stressed that the economy has often been at the mercy of the international copper market and that ups and downs in the market explain many Chilean economic reversals.

By Benjamin Peim The Santiago Times - News about Chile