Market Report, "Chile Retail Report Q4 2013", published

The Chile Retail Report examines the long-term potential of the local consumer market, but flags short-term concerns about the impact on Chile's economic outlook of high labour costs, a moderation in external demand and a fiscally conservative government.

The report examines how best to maximise returns in the Chilean retail market while minimising investment risk, and also explores the impact of the likelihood of a rapid and sustained economic downturn in China on the Chilean consumer and on the ability of producers and exporters to realise returns in the short term. The report also analyses the growth and risk management strategies being employed by the leading players in the Chilean retail sector, as they seek to maximise the growth opportunities offered by the local market. Chilean per capita consumer spending is forecast to increase by 30% to 2017, compared with a regional growth average of 32%. Chile comes sixth (out of seven) in BMI's Latin American Retail Risk/Reward Ratings.

Full Report Details at
- http://www.fastmr.com/prod/712762_chile_retail_report_q4_2013.aspx?afid=301

Among all retail categories, consumer electronics will be the outperformer through to 2017 in growth terms, with sales forecast to increase from US$3.67bn in 2013 to US$4.84bn by 2017, up more than 30%. The Chilean market offers continued growth potential in key digital products groups such as computers (20% penetration rate), notebook computers and LCD TV sets. In the competitive arena, BMI sees upside potential in Chile's free trade agreements, which have helped affordability of AV products such as digital TV sets (which are largely imported); the 2010 target for the launch of terrestrial digital TV was a further stimulus.

Over the last quarter, BMI has revised the following forecasts/views:

* Real GDP growth in Chile in Q113 was the slowest since the third quarter of 2011, owing primarily to a drop in fixed investment as the country's mining sector is squeezed by lower commodities prices. We maintain our view that weaker exports and gross fixed capital formation growth in Chile over the next few years will contribute to real GDP growth slowing to 4.3% this year and to 4.6% next, from 5.6% in 2012.
* We expect a weaker currency, as well as slowing investment and export activity, which will push up the unemployment rate in the latter half of this year from 6.2% in March to 6.8% by year-end, to lead to a moderate cooling in real private consumption growth. We forecast that real private consumption growth will fall to 4.6% and 5.0% in 2013 and 2014 respectively from 6.1% in 2012.

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