The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Latin America: Copper-bottomed Chile wrestles with risk

Tax reforms from Chile’s new, left-leaning government are having an unsettling effect on the economy, which is also suffering from a plummeting copper price. The country’s new president is looking next to tackle inequality with further reforms, but as a result the pressure will ratchet up its strong credit rating.

A new economic term is entering the lexicon for Chilean companies and high net-worth individuals: country risk. The new, leftist government of Michelle Bachelet is taking Chile on a fresh, but uncertain path: a tax law has been implemented, but there are still many unanswered questions about the education reform that will be funded by that fiscal reform, as well as key labour and constitutional reforms on the way.

Alfonzo_Eyzaguirre-large

 Chileans have realized that there is something called country risk – it exists – and that is leading to the desire to diversify outside the country

Alfonso Eyzaguirre

The immediate impact of the changed political environment has been a drop in domestic investment, as local business remains wary. “Large Chilean companies are in wait-and-see mode,” says Alfonso Eyzaguirre, managing director and senior country officer at JPMorgan in Santiago. “We all know the headlines [of the reform agenda], but it is very difficult for the locals to have a clear view on what the future is going to look like. With so many things changing in a short period of time, that has created the perception of risk that is generating some noise locally – and we are seeing that in terms of [lower] investment and employment.”

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree