MercoPress. South Atlantic News Agency

Investment banks predict strong Chile growth in 2006

Five of the world's most important investment banks agree that Chile's economy could grow 6% in 2006. On the same note, they warn that growth is at considerable risk due to falling copper prices, energy dependency and political instability.

Bear Stearns, Goldman Sachs, and Merrill Lynch all predicted over 5.5% growth for Chile, while Deutsche Bank's more conservative stance expects growth of just 5.3%.

The analysts agree that the new Bachelet administration has carried out the economic policies of the Lagos Administration, and predict various years of economic windfall for Chile.

Nevertheless, as Gustavo Cañonero from Deutsch Bank points out, the slowing down of world economies will impact Chile negatively because it would mean an abrupt fall in the price of local commodities. Analysts warn that Chile's energy dependency linked to the imminent, higher costs could cost Chile more money in the future.

Mathew Hickman from Credit Suisse observes internal factors like the political panorama that was recently marred by student protests and a cabinet shuffle. Hickman however applauds Chile's ability to reform.

"The social security system is one of the reasons Chile is so successful, whatever is threatening the country, they change it".

By Nick Parkinson The Santiago Times - News about Chile