This makes sense, really, as much of the country is in confusion and disarray. Hundreds are dead, millions of buildings are damaged, and the main highway was torn apart. The total economic impact may be as much as $30 billion, or about 15% of the GDP.
However, it's not all bad news for the Chile. Large copper and building companies are rallying with expectations of high demand. Not to mention Chile's high economic standings with a savings fund of 11.3 billion dollars allows it to not only stabilize the peso after today's sharp decline, but also will enable a quick reconstruction process.
Chile's economy gives it the highest debt rating, and puts it in the best position of any country in the region to fund the spending that's needed to rebuild after a disaster.
The government is going to rapidly disburse money for reconstruction in an effort to sustain growth and fuel a peso rally.
From all this, it's easy to see that, despite a few new dents, the Chilean government has a firm grip on things. And while long short term, this will be hard times for Chile and it's people, would you say in the long term, Chile can regain enough of a footing to make a speedy recovery?
Personally, I feel that, for a reasonably large and prosperous economy, natural disasters will indeed provide no more than a temporary obstacle to prosperity and growth. Natural disasters may cause damage and disruption, but it is local companies that work to fix that damage, which helps to offset the cost to the country's economy as a whole. Moreover, I feel that international investors are far more concerned with issues like government policy and stability, both of which are conducive to investors in Chile.
ReplyDeleteYes unlike haiti chile has a stable government and economy pre-disaster. Even now that havent yet asked for the assistance of any other nations in any way. I agree with ryan when he says this is only a temporary obstacle. It hurts their stocks now but as the rest of the world sees chile stabilize and return to where it was it will quickly bring the value of their stocks up as well.
ReplyDeleteI am glad that one country has it together. It seems like they are going to bounce back quite well. I think that since the country has actual savings (in comparison to America that has debt) and that businesses are still making profits, Chile will be in good condition quite soon. T
ReplyDeleteChile is in great shape, it seems like, to bounce back and regain their stance as a prosperous economy. This is very nice to see, especially given the current circumstances in Haiti. This natural disaster has only slightly detered the economic motion of Chile, and already it is nearly up and running at full steam. Chile has really got it together.
ReplyDeleteI believe they'll recover quite soon, the government is able to manage things in order efficiently and people all stick together. What's more important, they already had a rather stable economy and the natural disaster will not affect them in the long term. (A)
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