DUBLIN, Jul 04, 2012 (BUSINESS WIRE) -- Research and Markets has announced the addition of the "Chile Freight Transport Report Q2 2012" report to their offering.
We maintain our view that Chile's economy is headed for a slowdown in growth. We believe lower copper prices, the prospect of a recession in the eurozone and moderating private consumption will continue to drag on Chile's economic growth. Nevertheless, while we believe growth will slow, we do not see a severe deterioration of the economy and we are happy to stick to our above consensus 2012 Chilean real GDP growth forecast of 4.8%.
The country's freight transport network is somewhat reliant on copper exports. This poses some downside risks as copper prices remain low compared with their mid-2011 highs, and we are also concerned about a possible fall-off in Chinese demand, as we are forecasting its economic growth to slow to 7.5% in 2012. Any easing in China's growth will certainly have a negative effect on demand for raw materials like Chile's copper.
On the import side, we are concerned that global economic headwinds will feed through to private consumption growth, causing it to moderate over coming quarters as the effect of the central bank's monetary tightening cycle kicks in. Even though Chile's index of economic activity (IMACEC) picked up in September 2011, posting a 5.4% year-on-year (y-o-y) increase, we note that its three- and 12-month moving averages have continued to moderate, coming in at 4.7% and 6.8% respectively, which suggests that a broader trend of declining domestic consumption remains in place.
Although we see private consumption declining in the coming quarters, we believe domestic demand remains supportive of import growth. We believe Chilean imports will grow by 14.5% in 2012, almost two times faster than exports, which we believe will increase by 8.0% y-o-y over the same period, boding well for freight transport volumes.
Headline Industry Data
- Air freight tonnage is forecast to rise by 10.8% in 2012 to reach 340,900 tonnes.
- Total tonnes at the Port of Valparaiso forecast to rise 13.5%, to 11.96mn tonnes in 2012, with average growth of 11.9% over the next five years.
- Rail freight tonnage is forecast to rise 3% in 2012, reaching 28.2mn tonnes, with average growth of 2.7% over the next five years.