Chilean experts say nation ready to meet economic challenge after quake

10:01, March 02, 2010      

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Chilean experts said Monday that although Saturday's megaquake has weakened the Chilean economy, the country is ready to deal with the impact.

They told American Economy Magazine on Monday that it's difficult to estimate the tremor's impact on the country's economy, because the full scope of the damage is still unknown.

The earthquake struck off central-southern Chilean coast early Saturday, killing at least 723 people and destroying buildings, highways and bridges. It also triggered a tsunami that devastated some coastal towns.

But the experts believed Chile, one of the most solid and advanced economy in Latin America, has the ability and resources to deal with the economic impact.

For president-elect Sebastian Pinera who will take office on March 11, the quake will test his campaign promise on economic growth, they added.

U.S. company Eqecat estimated that the quake's damages could total 30 billion U.S. dollars, or 15 percent of Chile's gross domestic product.

It also said that the earthquake will affect Chile's recovery from the economic recession caused by the global financial crisis.

The company predicted that the Central Bank of Chile will keep low interest rates to boost the economy after the quake.

"There will be a wide and deep impact on the Chilean economy after the quake," said Nick Chamie, investigation chief for emerging markets at the RBC Capital Markets in Toronto, Canada.

Chamie and other Western experts said that the Chilean peso will be weakened due to the earthquake.

However, main copper mines in Chile, which are the country's economy engine, were not damaged, and copper exports will not be affected.

Chile produces one-third of the world's coppers.

Meanwhile, other international experts like Curtis Mewbourne, manager of the multinational company PIMCO, said the quake's direct economic impact could be limited.

Chile's fiscal position is considered as most solid in Latin America, which will help channel money into the efforts to rebuild hospitals and highways.

"It's possible that the central bank (of Chile) will keep extremely relaxed liquidity and momentary conditions in a near future, in order to support efforts of the government to stabilize the economy," said Alberto Ramos, an economist at U.S. investment consultancy Goldman Sachs.

Source: Xinhua
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