Widespread economic problems have impeded investors from taking advantage of the country's strategic position in the region and of its commitment to major trade agreements.
Still a better alternative than Brazil
To tackle the recent political and economic crises, Bachelet's administration proposed several reforms. For instance, tougher regulations on government and public sector officials aim to reduce pervasive corruption in the public sector and help the president regain her popularity.
Furthermore, President Bachelet and economy experts remain optimistic that fiscal spending and monetary policies implemented by the Central Bank of Chile will speed up economic growth through 2015. Indeed, the Central Bank forecasted positive growth in GDP, from 2.5% to 3.5% this year.
Overall, Bachelet and her administration have sought to reassure investors in health, energy and other major sectors in recent months. Energy Minister Maximo Pacheco devised a plan to boost energy investment and stopping the nefarious impact that drastic change in copper prices have on the economy.
With clearer legislated guarantees, new avenues are opening up in emerging industries, such as renewable energy.
Through early signs of economic recovery in January, Chile showed its aptitude in facing challenging domestic and international conditions. Even though the fallout from the political scandals hurt the President's image and popularity, it did not have a large impact on investment prospects and the government's capacity to implement stricter reforms.
Chile's reputation as an ideal business destination and its institutional strengths remain largely spotless.
Despite the recent corruption scandals and financial problems, Chile remains an attractive investment destination. The promising transparency and open economy indexes, combined with Chile's active work towards bilateral and multilateral trade agreements (ie. the Trans-Pacific Partnership) has allowed the country to consolidate its position as an important regional and international player.
In addition, investors need to look for an alternative to Brazil, which will likely face significant social and economic upheaval over the next five years. As Chile's economic slowdown seems to be temporary rather than a structural problem, the Golden Boy offers better prospects than Brazil for short and medium-term business.
(AP photo)
