Chile has certainly received a lot of attention lately due to the miner situation and the successful rescue operation that saved 33 men after being trapped for more than two months over a half mile underground. The spirit of the miners and the cooperativeness of government officials in working with other countries is a microcosm of a well respected country around the world with a booming economy and willingness to collaborate with other global economies.
South American oddity
In a continent that has been difficult to adapt to the growing global interconnectedness, Chile has virtually stood alone in South America. Chile is the only developing country and the first South American country to be admitted to the Organisation for Economic Co-operation and Development (OECD). The OECD is an organization that is committed to supporting economies with open markets and democratic governments. Chile's involvement in the organization shows its belief in the path of the country's economic development and its commitment to being a strong global partner with other OECD countries.
The economy
In a world of growing government debt, Chile has maintained a S&P A+ credit rating. Chile is fortunate to have the most copper mining resources in the world and has become the world's largest copper supplier. The country's copper mines are owned and operated by the government. State-formed CODELCO has been able to efficiently manage this resource, while allowing the benefits to flow back to the people of Chile through economic growth.
Unlike some other nations with vast mineral resources like oil baron countries, Chile has developed free trade agreements with the United States, the European Union, Canada, Japan, and China, among many others. This has helped ensure that copper resources have been put to good use. In fact, multinational companies such as IBM
Chile's economy is back in strong growth mode, while domestically our economy is still struggling. In the second quarter the country's GDP increased 6.5% over the previous year, which was good for the largest increase in five years. Economists believe this impressive growth can continue into the coming years.
Investors can gain some exposure to this growth through ETFs such as the iShares MSCI Chile Index Fund
Chemical & Mining Co. of Chile
The company is an agriculture play that specializes in the sale of fertilizers in Chile and globally. The company is also a producer of lithium, and recent growth prospects in the mineral business have real potential for the stock. As demand continues to increase for more environmentally friendly cars, the demand for lithium is also on the rise as the mineral is essential for batteries that fuel hybrid vehicles.
It is expected that lithium demand will increase from 100,000 tons to 250,000 tons on an annual basis. As a result, the company is bolstering its production of lithium by investing $350 million in the business. The company is in talks with some of the Japanese automakers to become a direct seller of lithium for their battery production. While some investors may be wary of such a large investment in the growth of hybrid and battery-operated vehicles, they can be comforted by the company's strong diversification in its other strong businesses.
The Foolish bottom line
Chile's strong growth, trade with other leading economies, and vast mineral resources have helped the economy show substantial growth through a difficult global economic environment. As the global economy continues to recover, Chile is in a strong position to prosper.
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