Macro Forum: The Street View



Chile’s economy slowed in the third quarter of 2018, growing 2.8% year-on-year, compared to 5.3% in the second quarter. The lowest rate of growth this year came about due to a slowdown in the mining sector. Other areas of economy continued their robust performance, particularly agriculture, forestry and services. Domestic demand increased 4.6% in the third quarter compared to a year previously.

Inflation fell for a third consecutive month in December to its lowest level in six months, 2.6% compared with 2.8% in November. The decline followed the first interest rate rise in 3 years, a quarter percentage point to 2.75% in October 2018

Copper production totaled 5.33m tonnes in the period January to November, 6% up on the previous year. Production for the month of November was at the highest level for 13 years. The price of Copper however remained subdued throughout the last two quarters of 2018, ending the year at 263.10 USD/lb following a significant price fall from a June high of 330 USD/lb. This has an associated impact on FX performance with the Peso weakening by 14.3% against the dollar over the whole 2018 period.

The M&A market surged in 2018 as attractive valuations boosted deal-making. Recovering from a politically volatile year in 2017, merger activity has grown more than 150% to $8.2bn





Real GDP Growth

Source: International Monetary Fund

Chile FX vs FV

Source: Bloomberg Spot Prices and Actis methodology for Fundamental Value


Source: International Monetary Fund


Nicolas Escallon

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Sebastian Pinera
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