Economic Uncertainty Weighs On Ratings

August 2008 | Risk Summary

The deteriorating outlook on Chile's economy is weighing on the country's economic risk ratings. Our long-term economic risk rating has dropped to 78.2 this month, from 92.7 amid the country's high reliance on commodity imports, scoring two out of 10 in this category. We note, however, that we still forecast 4.0% real GDP growth this year and believe that prudent economic policies will set Chile up for a prompt recovery in subsequent years. Indeed, should Chile's central bank remain on its current inflation-fighting course, we would consider raising the bank's independence score, which could see Chile's long-term economic risk ratings climb again.

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