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| Sebastián Piñera celebrates his victory in the Chilean presidential election |
Senior bankers in Chile expect a triumvirate of positive factors to make 2018 a much more positive year for banking performance than this year: lower political risk, higher GDP growth and favourable competitive dynamics in the banking market.
First, the clarification of Sebastián Piñera as the country’s next president, announced on Sunday, removes a long-lingering political risk that has weighed on credit demand from both corporates (investment decisions) and individuals (consumption).
Piñera won 54% of the low turnout – less than 50% of the electorate – and will take over from socialist president Michelle Bachelet in a clear move to the right for Chile.
His campaign commitments included a pledge to “simplify and reduce the burden caused by the tax reform”, which includes “gradually reducing the corporate tax rate to match the OECD average” and “perfecting the gaps and problems of the labour reform”.
Piñera was the market-friendly candidate and his victory should ensure that the second positive factor – a strong and broad-based economic recovery under way since mid-2017 – should be maintained.
Mining sector
Not only has the economically vital mining sector been showing a strong rebound since its record contraction in the first half of 2017, the previous governments’ efforts to diversify the economy seem to be working.
