Chile: Business confidence drops to lowest level in more than four years
July 11, 2013
In the second quarter, the business confidence index (IEE, Indice de Expectativas Empresariales) produced by the Santiago Chamber of Commerce (Camara de Comercio de Santiago) dropped to 60.1 points from the 70.9 points recorded in the first quarter. At the current level, the index sits at its lowest point since Q1 2009. Nevertheless, sentiment remains well above the 50-point threshold that separates optimism from pessimism.
The deterioration was broad-based, as all sectors lost ground over the previous quarter, with the commercial sector suffering the largest decline. In its statement, the Chamber of Commerce noted that business confidence suffered a sharp drop relative to the previous quarter, which suggests a spillover effect on the country's GDP in the second quarter. Moreover, since uncertainty in the global economy seems to have decreased, the downturn in business confidence largely stems from domestic reforms affecting businesses' future net income.
LatinFocus panelists expect fixed investment to grow 8.9% this year, which is up 0.4 percentage points percentage points from last month's forecast. For 2014, the panel sees fixed investment decelerating to a 7.0% expansion.