Rise of imports of capital goods in Chile

Published on 24 April 2019

The recovery of mining activity has led to the need to increase the supply of machinery in the South American country.

After a year of good performance in the international price of copper in the first three quarters, and a recovery in production due to the normalization of activities in the Escondida mine, the largest in the world for this metal, exploration and extraction activities of minerals in Chile have had an extraordinary rebound.

In the following table, you can see the evolution of the tariff items that represent some of the main capital goods used in the economy of the country: front loaders, bulldozers and drilling equipment.

It should be noted that the biggest increase has been in equipment with caterpillars and in drilling machines. In the case of the former, as they are equipment that is not used in affirmed land, it is very likely that their import will respond to the mining demand, while in the latter, it could only be mining or hydrocarbon products. Consequently, there are clear indications to link the greater import of machinery to the dynamization of mining activity.

On the other hand, it is interesting to note the diversity of origins of the machinery, and the balanced of its participation in international sales. As you can see in the following table, both North America, Asia and Europe, are important origins of these products. It is worth mentioning that this is an area in which confidence in the brand is very important for sales, beyond what can be offered in terms of prices, and that the products continue to come in large part from high-cost markets. of labor, which shows the importance of specialization.

In the following table, the participation of the main countries from which the machinery is exported to Chile is shown.

As you can see, the machinery is produced in large scale countries or with a high level of sophistication. This contrasts with what happened with cars, for which more and more producers decide to install factories in Asia.

In general terms, the recovery of imports of machinery can be seen as an augury of an expansive period in the Chilean economy. This could happen because the dynamism in the purchases of capital goods tends to be an advance of an increase in private investment. In the absence of large negative shocks, it seems that mining has acquired inertia and will drag the other productive sectors of the country towards a period of acceleration.

For more information about imports in Chile, you can enter the Veritrade portal.
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