MercoPress. South Atlantic News Agency
Bachelet announces stimuli program for the foundering Chilean economy
President Michelle Bachelet presented on Monday a 500 million dollars emergency plan to try and rejuvenate Chile's slowing economy via investment promotion. She added that half of the anticipated funding will come from adjustments to the budget while the rest will come from greater structural income from a tax reform that Congress is expected to approve soon Read full article
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Disclaimer & comment rules500 million, what a joke. It's like trying to water your lawn with an eyedropper.
Sep 02nd, 2014 - 11:08 am - Link - Report abuse 0Yes, she has made a stunning start, or something that rhymes with it.
Sep 02nd, 2014 - 11:45 am - Link - Report abuse 0This will go a long way, NOT.
500 million here, over 3% deficit there, 4500 million for Codelco, 8200 million for the free tertiary education, etc... and there it goes, the whole fiscal cushion of 25 billion we had rigurously saved during 10 years of reasonable politics for economy. Destroyed in shortest time, and with practically no long term effect. Damn, I hate the dumb people who elected nice-smile-mami...
Sep 02nd, 2014 - 12:17 pm - Link - Report abuse 0The three fools above are such fools.
Sep 02nd, 2014 - 02:01 pm - Link - Report abuse 0Anyone with a decent cranium could have predicted that once the copper boom ends, Chile was finished. I said it many times: in 40 years has Chile's economy diversified?
No.
Time to suffer the consequences no, and not even the most 'conservative' pro-crony capitalist president could do anything about it right now, unlike what the three above would want to make you believe.
Significant decline in private investment is directly related to the major tax reform expected to be passed by the Chilean congress.
Sep 02nd, 2014 - 02:20 pm - Link - Report abuse 0#4
You need to seriously seek professional advice.
Troll... very ignorant comment of yours. The copper price has fallen, but we still export more in usd as you (with tripple the workforce) do. The values we export in copper, you can only dream of with your most important export product (soja).
Sep 02nd, 2014 - 03:27 pm - Link - Report abuse 0The reason for the decline is another, its related to the populistic meassures of Bachelet, trying to imitate her “amiga de corazon”,CFK. At least I rely that we have a minimum of rational thinking as a nation, and we'll never fall so deep into abyss like Argentina currently does. Next election, the concertacion is dead meat.
It would be wrong to claim Chile has not diversified. Copper is still the main export but with at least 80 years of reserves and a market for it, it would be foolish not to exploit it while it can.
Sep 02nd, 2014 - 04:00 pm - Link - Report abuse 0Meantime, Chile has developed the salmon industry, wine industry, fruit exports, etc, and it still has not fully developed what could be a huge tourist market. There are considerable incentives for service industries to set up in Chile and I know some Indian based companies have taken that route. Chile has trade agreements with more then 50 countries and is a key member of the Pacific Alliance.
Copper prices have fallen to a more realistic level but fortunately Chile did not squander the money away but saved it. Social reforms are needed but I don't see that the government needs to foot the bill for it all.
@1,3,5
Sep 02nd, 2014 - 04:52 pm - Link - Report abuse 0It is not good news, but not time to panic yet. The rate of fall in investment has decrease from 2nd quarter to 3rd quarter. I suspect a lot of investment is on hold.
Non copper exports are going great - in fact I will be spending much of next year far from the Condor nest taking care of business.
@toby
“Anyone with a decent cranium could have predicted that once the copper boom ends, Chile was finished.”
If our universities fall below yours, our infant mortality surpasses yours or our life expectancy drops to your level, I will accept we are finished.
For your enlightenment, copper has been much lower before and we have still managed to grow.
No one in government seems to understand (or wants to understand) that government intervention, taxation, regulation and ownership of industry is the primary cause of most economic problems. There is no such thing as “public investment”; all government money must be taken from those who are actually producing something of value, and then it is distributed for political purposes, generally to the favorites and supporters of the people in power. If all industry (including copper producers and banks) were privately owned and run with the intention of making a profit, things would go along much better (provided that government didn't tax and regulate them to the point where they couldn't function).
Sep 02nd, 2014 - 07:47 pm - Link - Report abuse 0Yes, but Chile has both public and private investment in the copper mining business. Codelco is owned by the government, and although is less efficient, it's total contributions to Chile's wealth has exceeded that of the private mining companies. In the end, having both public and private hedges Chile well.
Sep 02nd, 2014 - 07:55 pm - Link - Report abuse 0A perfect example your argument however is both Venezuela and Argentina.
Socialist politicians never lose their ability to screw up economies.
Sep 02nd, 2014 - 08:30 pm - Link - Report abuse 0giving loans to small businesses and low income mortgages? What does that do long term? In the US this caused protests because the low income borrowers were upside down and foreclosed on. Brazil recently took steps to increase lending too... what types of small businesses will spring up? ones that need to cater to Brazilian tourists? Or something that burns Argentine energy? We have lousy neighbors creating economic disasters. Why get into debt and by into bubbles?
Sep 02nd, 2014 - 10:48 pm - Link - Report abuse 0So many Chicken Littles.
Sep 03rd, 2014 - 03:43 am - Link - Report abuse 0Chile is not becoming an Argentina or Venezuela.
Perspective. Not every left of centre government leads to the same place. Countercyclical policies are what are needed during a slowdown. Bachelet's government hasn't caused the slowdown like Cristina and Dilma have in their countries.
@13 Anglotino
Sep 03rd, 2014 - 01:20 pm - Link - Report abuse 0You are right that this government hasn't caused the slow down, but their policy intentions have made it worse. If you look at investment projections per quarter for the last couple of years you will see that there is healthy year on year increase until 3rd quarter last year at which point there is a drastic drop to negative territory.
There is no dramatic global slow down that caused that. China is slowing down, but the US is picking up. Copper has fallen but still has a good price. So why the dramatic drop in investment projection for Chile?
Answer: tax reform.
In her first term, Bachelet stuck with the policy of building up counter-cyclical reserves. The problem this time round is that what the electorate demands is not compatible with past economic policy.
This lady has managed to destroy the basis of Chile´s economy through her fundamental reforms to Tax, Education and Constitution. She does not understand that business needs stability in the rules of the game in particular mining for example and she wants to eliminate our foreign investment law DL 600 that provides equal standing, tax assurance but most important it provides Access to foreign Exchange for Capital and dividends.
Sep 03rd, 2014 - 05:06 pm - Link - Report abuse 0What?
Sep 03rd, 2014 - 10:25 pm - Link - Report abuse 0Reforms are how an economy adapts. Brazil doesn't reform. Argentina doesn't reform. Venezuela doesn't reform.
Business love reform. That's why they do it themselves. The business or economy that doesn't reform stagnates and eventually fails.
Chile needs reform. Whether it will be done right is a different problem. Investment may pause as it takes stock of reform but that does not mean it disappears.
Australia had a major tax system overhaul and reform about 13 years ago. It caused disruptions to the economy and business groups and the opposition claimed it would lead to ruin and wouldn't work. It did and helped further strengthen our economy.
Indeed it should be remembered that in the past 24 years we have had only 3 quarters of negative growth and this tax reform caused the first negative growth in 10 years (the GFC causing the others).
A country can outgrow the systems that caused its prosperity. Chile is no longer a poor autocratic society but one of the most dynamic and stable in South America. Reform is what will lead it further along this path.
Let's hope it's done right.
Well, I tend to follow the UDI and the RN, certainly I'm against our current president's policies, but things are not that grave in Chile.
Sep 04th, 2014 - 01:57 am - Link - Report abuse 0Hopefully she'll modify some of her socialist ideas to lessen the concern of investors, but none the less my country remains with one of the best economies in the Americas.
Australia already is turning back to the right direction after some foolish Socialist errors. In the meantime the Chilean right needs to get its act together.
Plenty of Chilean salmon and Chilean wines on sale in the UK. I hope it continues. Great quality!
Sep 04th, 2014 - 10:05 am - Link - Report abuse 0If you want to live your lives in POVERTY vote SOCIALISM.
Sep 04th, 2014 - 12:12 pm - Link - Report abuse 0Unless of course you are a champagne socialist politician - the ultimate parasite.
Chile has inaugurated its biggest ever wind farm as part of its bid to wean itself off fossil fuels and tap its massive potential for renewable energy.
Sep 04th, 2014 - 12:35 pm - Link - Report abuse 0The El Arrayan farm is located on a coastal hillside 400km (250 miles) north of the capital Santiago.
Built at a cost of $300m (£180m), it consists of 50 giant turbines with an installed capacity of 115 megawatts.
But despite its size, it represents less than 1% of Chile's total electricity generating capacity.
http://www.bbc.co.uk/news/world-latin-america-28950685
Good investment, or showpiece?
Chicureo
Sep 04th, 2014 - 01:11 pm - Link - Report abuse 0That is the great thing about parties that sit near the centre. If you let power oscillate between the two they always blunt the extreme policies of the other.
So our centre-right government is now undoing some but not all of the centre-left policies and when they get back into the government they will do the same to the centre-right policies they don't like.
It is when governments keep perpetuating and entrenching their policies without an effective opposition coming to power to blunt some of them that you get looney economies like Argentina and Venezuela.
Chile is like Australia, the government policies veers lightly left and right and over the long term stay pretty central.
@Anglotino
Sep 04th, 2014 - 03:59 pm - Link - Report abuse 0We had 16 years of military rule, followed by 20 years of centre-left government. Luckily, the centre-left adhered to the economic model prescribed in the latter years of Pinochet's rule.
We are now “veering” for the first time since 1985. In those 30 years we have improved in almost every way. The current reforms are driven by the slightly irresponsible promise of “more free stuff for everyone” at the last election.
Slower economic growth caused by the reforms is a small inconvenience compared to the consequences of the reforms failing to deliver the free stuff so many wanted. If we reach the end of Bachelet's term with those who voted for her feeling they haven't got what was promised, we will veer further in the wrong direction.
The chances of an oscillation back to the right are about as likely as Think coming on here and saying “Seems those Chilean Momios were right after all” .
Condorito
Sep 04th, 2014 - 11:57 pm - Link - Report abuse 0You don't believe this government will eventually lose power?
If there is no chance of a centre-right party coming to power then I'd believe you. But that isn't likely is it? Didn't you just have one in power?
We're next to a failed state. It's not Chicken little to think there will be contagion effect in Chile. Look at Elisa Carrio's or Adrian Salbuchi's youtube channel...Argentina's fascist run economy will leave millions in the dark and hungy and severe civil unrest. Kicillof, Timerman, and Cristina give these speeches that are just ironic jokes on how they hate the place and the patria that they govern. This regime is holding gas and food hostage and wants to leave a bag of $hit for the next crew. They care 0 about a legacy. Kirchner, Kicillof, Timerman, and CF Wilhelm were all part of a persecuted against minority during Peron and Videla..somehow the Kirchners came out rich. Hiding behind the Cristina Fernandez name? It sounds like a catholic Spaniard one....But if you think a government with a presidency pretending to be catholic and a cabinet entirely full of admittedly Marxist and jewish people cares anything about the future of Argentina and Its neighbors...You're mistaken and ignorant. You're not a Harvard grad to point out how the Kicillof model doesn't work. It's not meant to. It's made to generate destruction and hunger from Santiago to Beijing, to the factories in Santa Catarina. Copper is down and Chilean retailers that cashed in on argentina's inflation hoarding are getting nailed...with shortages on the way. Just one of many examples of ties with a failed state that are crumbling different sectors...some faster than others. Cristina said her government is Jesus washing his disciples feet, this woman is not the woman of Cristo. Did her mom help her write that on her way to synagogue? In life there are ironies. People not stoned from Hollywood can see that. Cristina is the most powerful woman in the world, she corrupted the Vatican and can leave China's food producer in chaos with the flip of a switch.
Sep 05th, 2014 - 03:24 am - Link - Report abuse 0Commenting for this story is now closed.
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