High Unemployment Weighs On Risk Rating

Our short-term political risk rating for Chile drops somewhat this month, on the back of a high unemployment rate. Registered unemployment rose to 10.8% in the three months to July, and stayed at this level in the three-months to August. Moreover, a loosening of Chile's labour market has kept downside pressure on wages in light of the country's deepest recession in recent times, amplifying the effect the rising unemployment rate could have on political risk. An example of this has been the commencement of strikes by mining workers at Australian mining company BHP Billton, following an unsuccessful wage negotiation with workers in late September. As long as unemployment remains over 10% in Chile, therefore, we will not look to revise our ratings upwards.

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