February 26, 2020 / 2:39 PM / 3 months ago

Chilean finance minister sees economic impact of coronavirus as 'limited'

SANTIAGO, Feb 26 (Reuters) - Chile’s finance minister, Ignacio Briones, said on Wednesday he expected the coronavirus outbreak to have a “limited” impact on the country’s economy despite its dependence on China for the export of its key commodity, copper.

Briones told foreign journalists in the Chilean capital Santiago that the situation was “a worry” and his team was monitoring its impact closely.

He said Chilean exporters to China - chief among them fruit growers, paper firms and miners - had reported delays and logistical problems but no interruption in orders.

“At this stage we don’t see a major impact on the Chilean economy,” he said. “It’s an area to monitor closely and a worry but I think the effects of this coronavirus pandemic are still limited.”

Chile sends around 30% of its exports to China and 50% of its copper.

“We know that this is going to hit Chinese growth, and China is a fundamental commercial partner for us,” Briones added.

This week economists predicted that the coronavirus could alter the 2020 investment outlook for Latin America, with Chile the most significantly hit by weak demand from its main trading partner.

Bank of America Merrill Lynch’s (BAML) latest monthly survey of Latin American fund managers showed that 27% of respondents believed the economic situation in Chile would deteriorate over the next six months, compared with 7% who felt the same in January.

Economists and strategists at Citi Bank put Chile at the top of a “vulnerability index” for risks from the coronavirus associated with economic growth, supply chains, commodities, and “external” market volatility risks. Goldman Sachs said a 10% drop in commodity prices would knock 1.3 percentage points off Chile’s gross domestic product.

The virus outbreak emerged at the end of December in central China and has killed more than 2,700 people, while the world’s second-largest economy struggles to return to normal. (Reporting by Natalia Ramos; writing by Aislinn Laing)

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