Chile economy: Non-copper exports now exceed 50% of total

Event

Chile’s export promotion agency, ProChile, has reported that non-copper exports reached US$13.06bn in the first four months of 2013, with copper exports amounting to US$12.90m. This is the first time that non-copper exports have exceeded 50% of the total since 2005.

Analysis

The cycle of very high international copper prices that began in the middle of the last decade raised the share of copper in Chile’s total merchandise exports from around 37% up to 2003, to a peak of 58% in 2010 and 54% in 2012. The resulting increase in inflows of foreign currency led to a major appreciation of the peso over the past decade, and this cut the profitability of exporters of non-copper goods severely, forcing them to innovate and increase productivity to grow or even survive. Exporters of non-copper goods were able to increase their export earnings nearly threefold over the past decade – while copper export earnings increased more than fivefold – but sliding copper prices have brought copper and non-copper exports to virtual parity at present.

The resilience and dynamism of non-copper exporters is likely to reduce Chile’s dependence on copper in the coming years, helped by the country’s large network of free-trade agreements and the additional trade liberalisation that will be brought about by the Trans-Pacific Partnership (TPP) agreement, which could be reached as soon as October. The TPP was launched in November 2011 by the leaders of nine countries: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the US – with a goal of enhancing trade and investment, and promoting innovation and economic growth. Similarly, Chile is linked with Mexico, Peru and Colombia in a pan-regional integration project, the Alianza del Pacífico (Pacific Alliance), also created in 2011.

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