1.

0 CHILE - Country Overview

1.1 Overview

Chile (officially the Republic of Chile) is a long narrow country bordering Peru (North), Bolivia (Northeast)
Argentina (East) and ending at the Drake Passage in the South. Although one of the most stable countries
in South America Chile did endure a 17 year military dictatorship under General Pinochet which ended in
1990. Chile also leads Latin America in GDP per capita and was a founding member of the United Nations
and the Union of South American Nations. Chile expands over 38 degrees in latitude and as such the
climate is difficult to generalize. Chile began to experience a moderate economic downturn in 1999,
brought on by unfavorable global economic conditions related to the Asian financial crisis, which began in
1997. The economy remained sluggish until 2003, when it began to show clear signs of recovery,
achieving 4.0% real GDP growth. The Chilean economy finished 2004 with growth of 6.0%. Real GDP
growth reached 5.7% in 2005 before falling back to 4.0% growth in 2006. GDP expanded 5.1% in 2007.
Chile has however been the fastest growing economy in Latin America over the last 15 years, with an
average annual per capita growth rate of 4.1 percent over the fifteen years following the return of
democracy in 1990. The primary natural resources of Chile are Iron ore, nitrates, copper, timber,
molybdenum, hydropower and other precious metals. Chile has a strategic location relative to the Atlantic
and Pacific ocean sea lanes. (Drake passage, Beagle Channel, and the strait of Magellan)

1.2 The Forest Products Industry

Chile much like the majority of South American countries has favourable climate and soil conditions ideal
for agro-forestry plantation forestry. In 1974 the forest industry started to develop with the introduction
of a government led initiative program as part of the Decreto Ley 701 (DL701), the implementation of this
new forestry law resulted in the establishment of over two million hectares of plantation forestry
predominantly Eucalyptus and Radiata Pine. An integrated industrial infrastructure was also developed at
this time to process the raw materials for the forestry sector and has today become one of the major
economic drivers of the country.

It has been reported that approximately 40% of Chile is classified as forestry land with a further 20% of
this land afforested. In comparison 2.62% of land in Chile is classified as arable land with 0.43% of this
retaining permanent crop cover.
There are approximately 7,000 owners with established agro-forestry farms commercially growing timber,
the estimated share of the forestry market has been determined as 6% old growth native forest, 38%
mature native forest, 23% second growth native forest, 18% scrub native forest. 1% mixed forest, whilst
agro-forestry areas (predominantly Radiata Pine and Eucalyptus but also including Poplar and Douglas Fir,)
make up 14%.
It is estimated that Chile produces nearly 23 million cubic metres of Radiata Pine and Eucalypt annually
and currently Chile’s forest industry contributes 3% of total GDP and makes up 10% of all exports in Chile
and 2% of the world trade in forest products. There is a sustained yearly growth of 7% per annum whilst
the paper and pulp industry produces 2,000,000 tons of cellulose, contributing to 50% of the total forestry
exports and it is widely recognized that cellulose will make up 80% on future investments. Under Chilean
law it is required that every harvested forest area be re-planted
Wood pulp producers have made major investments in modern, low-pollution industrial plants and
processing technologies to meet European market demand. Chile’s exports focus makes them a reliable
trading partner and it has demonstrated an ability to standardize and harmonize with market demand,
share market information, adapt to the Argentinean crisis. Chile’s geographical location in relation to
export markets and use of natural resource-based exports act as major momentum providers for
economic growth. However, technology restrictions and forest-certification, coupled with NGO pressure
or boycotts are all potential challenges to the industry and important considerations for investors. The
major competitive threats regarding Chile are its likelihood of markets becoming more competitive in
internationally as exports increase, increasing production, low competing production costs and cheaper
labour relative to competing nations.

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 CHILE GEOGRAPHIC DATA

LOCATION GEOGRAPHIC LOCATION

Between Argentina and Peru, bordering the Pacific Ocean 30 00 S, 71 00 W
Neighboured With Total Area
Argentina, Peru, Bolivia 756,102 sq km
Total Land Total Water
743,812 sq km 12,290 sq km

LAND BOUNDARIES MARITIME CLAIMS

Total Area Territorial Sea
6,339 km 12 nm
Argentina Boundary Exclusive economic zone
5,308 km 24 nm
Bolivia Boundary Contiguous Zone
860 km 200 nm
Coastline Boundary Continental Shelf
6,435 km
200/350 nm
Peru
171 km

RENEWABLE WATER AND WITHDRAWAL

CLIMATE AND TERRAIN
Climate Total renewable water resource
temperate; desert in north; Mediterranean in central region; 922 cu km
cool and damp in south Withdrawal (Domestic / Industrial / Agriculture)
Elevation Points 12.55 cu km/yr
0m - 6,880m Withdrawal per capita
Terrain 770 cu m/yr
low coastal mountains; fertile central valley; rugged Andes in
east NATURAL RESOURCES
Arable land percentage (2005) Copper, timber, iron ore, nitrates,
2.62% precious metals, molybdenum, hydropower
Permanent crop percentage (2005)
0.43%
Other land use percentage (2005)
96.95% ENVIRONMENT ISSUES
Irrigated land Widespread deforestation and mining threaten
19,000 sq km (2003) natural resources; air pollution from industrial
and vehicle emissions; water pollution from raw sewage
NATURAL HAZARDS
Severe earthquakes; active volcanism; tsunamis

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 GOVERNMENT AND COUNTRY DATA

CONVENTIONAL LONG FORM NAME GOVERNMENTAL ADMINISTRATION DIVISIONS

Republic of Chile Aisen del General Carlos Ibanez del Campo, Antofagasta,
Araucania, Arica y Parinacota, Atacama, Biobio

LOCAL LONG FORM Coquimbo, Libertador General Bernardo O'Higgins,

Republica de Chile Los Lagos, Los Rios, Magallanes y de la Antartica Chilena

CONVENTIONAL SHORT FORM LEGISLATIVE BRANCH

Bicameral National Congress or Congreso Nacional consists
Chile of the
Senate and the Chamber of Deputies

LOCAL SHORT NAME

Chile JUDICIAL BRANCH
Supreme Court or Corte Suprema (judges are appointed by
the president and ratified by the Senate from lists of
FORMER NAME 2 candidates
provided by the court itself; the president of the Supreme
Court is elected every three years by the 20-member court);

CAPITAL
Santiago POLITICAL PARTIES
Alliance for Chile

CAPITAL CO-ORDINATES Independent Democratic Union

33 27 S, 70 40 W Coalition of Parties for Democracy
Socialist Party

LEGAL SYSTEM Radical Social Democratic Party

In June 2005, Chile completed overhaul of its criminal Communist Party
justice system to a new, US-style adversarial system Humanist Party

VOTING POLITICAL PRESSURE GROUPS

18 years of age; universal and compulsory Roman Catholic Church (Particularly Opus Dei)
United Labor Central

GOVERNMENT TYPE
Republic

HEAD OF GOVERNMENT
President Michelle BACHELET Jeria

PRESIDENT
President Michelle BACHELET Jeria

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 CHILE POPULATION DATA

POPULATION (2009 est) MEDIAN AGE

Total population 31.4 years
16,601,707 Male
0-14 years 30.4 years
23.20% Female
15-64 years 32.4 years
67.80%

65 years + LIFE EXPECTANCY AT BIRTH

9.10% 77.34 years

BIRTH RATE
POPULATION GROWTH RATES (2009 est) 14.64 births/1,000 population

Growth rate (Percentage) DEATH RATE

0.88% 5.84 deaths/1,000 population

MIGRATION (Net)
INFANT MORTALITY (2009 est) NA (2009)
Male (2009 est)

8.49 deaths/1,000 live births SEX RATIO (2009 est)

Female (2009 est) Under 15 Years (2009 est)
6.88 deaths/1,000 live births 1.05 male(s)/female
Total (2009 est) 15-64 Years (2009 est)
7.71 deaths/1,000 live births male(s)/female
65 years + (2009 est)

LITERACY (2003 est) 0.72 male(s)/female

Male (2003 est) Total Population (2009 est)
95.80% 0.98 male(s)/female
Female (2003 est)

95.60% RELIGIONS (2002 Census)

Total population (2003 est) Roman Catholic
95.70% 70%
Education expenditure (2006) Evangelical
3.2% of GDP 15.10%
Jehovah's Witness

ETHNIC GROUPS 1.10%

White and White-Amerindian Other Christian
95.40% 1.00%
Mestizo Other
Mapuche 4% 4.60%
Other Indigenous groups
0.60% LANGUAGES
Spanish (official), Mapudungun, German, English

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 2.0 CHILE - Economic Data

2.1 Overview

Chile’s market orientated economy has been characterized by gaining preferred market access to certain
countries in fact Chile now has agreements with 53 countries that represent 86% of world GDP, this has
been accomplished by the participation of free trade agreements with Mexico, Canada, and the European
Union (EU). Chile also has a bilateral trade agreement with the Southern Cone Common Market
(MERCOSUR) countries, and Central America. It has also received invitations to Asia-Pacific Economic
Cooperation (APEC), Latin American Integration Association (LAIA), and North American Free Trade
Agreement (NAFTA). Chile actively participates in negotiation of the Free Trade Area of the Americas
(FTAA), but negotiations between Chile and the United States have been held up mainly due to the U.S.’s
hesitation to address sensitive agricultural issues. The democratic government of Patricio Aylwin that took
over from the military in 1990 has been viewed as a strong role model for economic reform and in 2006
Chile became the country with the highest nominal GDP per capita in Latin America.

Between 1991 to 1997 growth in real GDP was averaging 8%. However in 1998 this growth halved,
primarily due to lower export earnings and a tightening of policies in order to regain control of the then
current account deficit. Since this time Chile has succeeded in recovering and has experienced growth of
between 5-7%.

Chile has a good reputation with strong financial institutions and currently holds the strongest sovereign
bond rating in South America. The global competitiveness report for 2007-2008 has also ranked Chile as
th nd
26 most competitive country in the world above in comparison Brazil ranked 72 and Argentina ranked
th
at 85 . Chile is highly dependant on export markets which account for more than 40% of the GDP with
commodities making up three quarters of exports. Copper provides one third of the government revenue
and Codelco the worlds largest copper producing company is state owned. The fastest rising imports
however are non traditional and in 1975 these comprised 30% of the total exports, the latest figures
regarding non traditional exports now show that these make up around 60% of the total export market.
With timber and forestry goods already a major part of the economy now the second most important
market after mining.

Over the past five years, foreign direct investment inflows have quadrupled to some $17 billion in 2008.
The Chilean government conducts a rule-based countercyclical fiscal policy, accumulating surpluses in
sovereign wealth funds during periods of high copper prices and economic growth, and allowing deficit
spending only during periods of low copper prices and growth. As of September 2008, those sovereign
wealth funds - kept mostly outside the country and separate from Central Bank reserves - amounted to
more than $20 billion. Agro-forestry plantations produce over 85% of the total Chilean forest products
exports. Much of the native woodland, however, remains unused, mostly because of its inaccessibility to
commercial loggers. Insignis pine, or Monterey pine, accounts for a large part of all timber production.

5
 ECONOMIC INDICATORS

GDP (purchasing power parity) GDP (real growth rate)

2006 (est) 2006 (est)
$226.3 billion 4.60%
2007 (est) 2007 (est)
$236.9 billion 4.70%
2008 (est) 2008 (est)
$244.5 billion 3.20%

GDP (per capita PPP) GDP (sectoral composition)

2006 (est) AGRICULTURE

$14,000 4.80%
2007 (est) INDUSTRY

$14,500 50.50%
2008 (est) SERVICES
$14,900 44.70%

LABOUR FORCE (sectoral composition) LABOUR FORCE

AGRICULTURE TOTAL (2008 est)

13.20% 7.267 million

INDUSTRY UNEMPLOYMENT RATE (2007 est)

23% 7.00%
SERVICES UNEMPLOYMENT RATE (2008 est)

63.90% 7.80%
POPULATION BELOW POVERTY LINE (2006)

FAMILY INCOME DISTRIBUTION (Gini index) 18.20%

54.9 (2003)

57.1 (2000) INFLATION RATE (consumer index)

2007 est

INVESTMENT (gross fixed) 4.40%

24% of GDP 2008 est

BUDGET REVENUES (2008 est) 8.70%

$44.79 billion
CENTRAL BANK DISCOUNT RATE (31st Dec
BUDGET EXPENDITURES (2008 est) 2008)
$35.09 billion 8%

PUBLIC DEBT COMMERCIAL BANK (prime lending rate)

2004 est (of GDP) 31st Dec 2008
12.8% of GDP 4.97%

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 2008 est (of GDP) 31st Dec 2007
5.2% of GDP 8.67%

STOCK OF QUASI MONEY STOCK OF MONEY

31st Dec 2007 31st Dec 2007
$80.42 billion $16.6 billion
31st Dec 2008 31st Dec 2008
$NA (31 December 2008) $NA (31 December 2008)

MARKET VALUE OF PUBLICLY TRADED

STOCK OF DOMESTIC CREDIT SHARES
31st Dec 2007 31st Dec 2006
$127.1 billion $174.6 billion
31st Dec 2008 31st Dec 2007
$NA (31 December 2008) $212.9 billion
31st Dec 2008

PRODUCTS $132.4 billion

AGRICULTURE

grapes, apples, pears, onions, wheat, corn, timber, ELECTRICITY

oats, peaches, garlic, asparagus, beans; ELECTRICITY (production)
INDUSTRY 50.37 billion kWh (2006 est.)
copper, other minerals, foodstuffs, fish processing, ELECTRICITY (consumption)
ron and steel, wood, cement, textiles 45.52 billion kWh (2006 est.)
INDUSTRIAL PRODUCTION GROWTH RATE ELECTRICITY (exports)
0.7% (2008 est.) 0 kWh (2007 est.)
ELECTRICITY (imports)

CURRENT ACCOUNT BALANCE 1.628 billion kWh (2007 est.)

2007 est

$7.189 billion OIL

2008 est OIL (production)
$-3.44 billion 11,610 bbl/day (2007 est.)
OIL (consumption)

EXPORTS 253,000 bbl/day (2006 est.)

2007 est OIL (exports)
$67.67 billion 32,500 bbl/day (2005)
2008 est OIL (imports)
$66.46 billion 222,900 bbl/day (2006 est.)
EXPORT PARTNERS (2008)

China 15.5%, NATURAL GAS

Brazil 5.7%, NATURAL GAS (production)
South Korea 5.9% 1.8 billion cu m (2007 est.)
Japan 10.2%, NATURAL GAS (consumption)
US 11%, 4.2 billion cu m (2007 est.)
Netherlands 5.1%, NATURAL GAS (exports)
EXPORT COMMODITIES 0 cu m (2007 est.)

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 We hope that you have enjoyed this 7 page
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This forestry “market brief” is a Greenwood Management
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well as professionals.

You can access the full 56 page report by going to –

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Or alternatively you can email –

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