Fynsa
After some publications, particularly the one made by the international agency Bloomberg, the debate has begun on whether Chile has once again become the safest economy to invest in the region..
Within the arguments, some absolutes are used, but also quite a few relative ones. In this sense, the fall in country risk is a key measure, especiallyThe country risk is a key measure, especially after having shown a significant increase during the last period, even over other countries in the region that have experienced political and social instability.
In addition, local financial markets suffered from this increased uncertainty, which was evident in the equity, fixed income and foreign exchange markets.. These faced significant penalties, but then did not show the normalization that could be observed in other countries, which, according to different analyses, corresponded to idiosyncratic factors.
In any case, in recent times, and as the publication highlights, both the fixed-income and foreign exchange markets have shown normalization, both the fixed-income and foreign exchange markets have shown a normalization, which at some point could have beenwhich at some point could even have been considered excessive.
Within this greater perception of local risk, we find that the information provided by the Daily Index of Economic Uncertainty, elaborated by the Central Bank, and the Economic Uncertainty Index (IEC) and Political Uncertainty Index (EPU), constructed by CLAPES UC, is extremely relevant. All three had shown an important jump after the social crisis, which was exacerbated by the pandemic.
However, what was most interesting was that a new level of base uncertainty seemed to have been generated in the country, which was even higher than any other situation of economic and/or financial stress in recent history.
Simply put, Chile was not perceived to be more insecure temporarily, but permanently. In this line, it is noteworthy that the Central Bank index was, as of January, at the lowest level since October 2019, while those of CLAPES, although still high, are below the average of the period after the social crisis.
With all this on the table, it is worth asking if this makes Chile the safest economy to invest in the region, but talking about investment other than portfolio or short term. It is true that the variables I mentioned in the previous paragraphs cannot be looked at in less and the availability of funds is important, especially after the decline of the local financial market following the withdrawals of pension funds.
However, However, the conditions that make an economy reliable (or "safe") for investment have to do with the rules of the game, legal, tax, regulatory certainty, etc., i.e., institutions.The rules of the game, legal, tax and regulatory certainty, etc., i.e., institutions. Mobilize our efforts to reinforce the institutions that work and generate permanent consensus on those that work. generating permanent consensus on those that we want to work is vital to produce the stability that those who expect to invest require, but also for those of us who live in the country to perceive improvements in our wellbeing. That is a safe country.
