November 21, 2012
The Chilean economy is booming right now. Full stop. From agriculture to retail to construction to mining. Everywhere you look, it’s happening.
This isn’t pretend economic growth, conjured out of thin air by central bankers who drop freshly printed currency from helicopters. It’s the real kind, brought about by increased production, greater exports, technological development, and fiscal discipline.
So far this year, for example, the Chilean government has posted a budget surplus of 1.7% of GDP, up from 1.4% last year. Unsurprising, Chile’s gross debt level is a paltry 11.3% of GDP, putting it in the same category as countries like Saudi Arabia and Estonia.
Yet despite such a strong fiscal position, taxes in Chile are the lowest in the OECD at just 17% of GDP. This means that a whopping 83% of all economic activity remains in the hands of private businesses and individuals, not incompetent, thieving bureaucrats.
All of this is self-reinforcing. Low taxes mean that the economy can grow, unrestrained. And high economic growth means that the government can keep tax rates low. It’s a virtuous circle.
Here’s the best part, though. Amid all of this economic growth, there’s tremendous opportunity on the ground here. Jobs are plentiful, disposable income is growing, and confidence is high.
If you’re an employee type, chances are you’ll be able to find a job here. The labor market is tight, and companies really need talented workers. Plus, new ventures are being created daily, and foreign companies are investing heavily in the country.
Not to mention, Chilean immigration law is perhaps the most straightforward in the western hemisphere. There are very few obstacles to obtaining a work permit. And of course, you can eventually obtain citizenship as well.
(I should mention that a passport from Chile is one of the more valuable in the world… more on that soon.)
If you’re an entrepreneur or investor type, the opportunities are even more sensational. Wealth in Chile is rising, so overall demand is very strong. But the supply of very high quality products and services is incredibly tight.
To give you an example, Chileans who are coming into wealth for the first time want to send their children to the best private schools possible. But the supply and demand are so out of balance that tuition rates have gone through the roof… yet the schools still have waiting lists a mile long!
The same fundamentals hold for just about every high quality product or service across the economy… from beauty and anti-aging treatments to heavy machinery to high performance sports cars to top brand electronics to fine dining.
This is especially true for the luxury market in Chile, which is growing at a rate of 20% p.a. according to the Association of Luxury Brands. Ferrari sales last year quadrupled over the previous years. Premium restaurants are often booked out days in advance.
This is just the tip of the iceberg. There’s much more growth to come for Chile, and this means there is a lot of room for foreigners to set up shop, ply their skills, and make a fortune in this booming economy.