The Chilean retail savings and investments market was one of only two markets in the Americas to grow during 2008, the other being Mexico. Since 2006, the Chilean market has grown at a CAGR of 14.7%. While growth is forecast to be slower in the next five years, the Chilean market will continue to grow at a CAGR of 9.02%.
Over the last five years the retail savings and investments pool in Chile grew to an estimated value of $134bn in 2011. When compared to the other countries analyzed by Datamonitor's Americas Retail Savings and Investments Database 2011 (Argentina, Brazil, Canada, Mexico, and the US), Chile is the second smallest market in the region, above Argentina.
GDP growth in Chile reached 6.1% in 2011 and is forecast to remain around 5.0% during 2011-15. Continual economic expansion will be a key driver in the country's still fast-growing retail savings and investments market. Chile has over 60 bilateral or free trade agreements, which include China, India, and South Korea. The Chilean export market, which is led by commodities - mainly copper - will continue to bring prosperity to the country as its trade partners continue to grow, albeit at a slower rate. Moreover, the resulting emerging middle class will contribute to the increase in individual Chilean wealth.
Product-wise, equities and mutual funds will experience the strongest growth in the next five years. In 2010, only one initial public offering (IPO) was made on the Santiago Stock Exchange. By August 2011, there had already been four Chilean IPOs. In addition, the Chilean mutual fund industry has been under constant development since the economic reforms of the 1970s. Chile has a reputation for its sound financial institutions, and the opportunity to diversify assets by holding different financial instruments through mutual funds is very attractive to the typically prudent Chilean investor. The Chilean mutual fund industry was further improved in early 2011 when the government modernized industry legislation to streamline the complex individual legal definitions of different types of funds. With this reducing confusion among investors, the product class is now even more attractive.
Future growth in the Chilean retail savings and investments market will be second only to growth in the Brazilian market. In December 2011, inflation reached 4.4% in Chile, above the central bank's target rate of 3.0%. If inflation can be reduced, real returns from liquid investments will increase, attracting more Chilean individuals to a retail savings and investments market that is forecast to grow at almost double the rate of the US market.
For further information, please refer to Datamonitor's Americas Retail Savings and Investments Database (January 2012, CM00144-014).