Chilean group looks to infra to spark economy

A leading construction advocacy group says big infrastructure plans are needed to sustain the country's growth through the commodities slump.

Faced with slowing growth and high exposure to the global commodities slump, construction industry advocacy group Camara Chilena de la Construccion (CChC) says Chile needs $151 billion in infrastructure investment to sustain economic growth for the next decade. 

The group recently released a report named “Infraestructura Critica Para el Desarollo” calling for massive investment into infrastructure works, which it said are “required to avoid increasing deficits from 2016 to 2025”.

The paper called for total investment of $12.54 billion into water, $11.56 billion into energy and $26.35 billion into telecommunications assets, all of which it included in a grouping defined as “basic-needs infrastructure”. 

In the logistics sector, CChC said $20.2 billion was needed for intercity roads, $1.7 billion for airports, $4.39 billion for ports and $4.04 billion for railways through the 10-year period. 

Transportation again surfaced as a significant area of need in what CChC defined as social infrastructure, including roads and urban transport, which the organisation said required $54.02 billion in investment. Also included in the sector were public spaces (the group called for a $859 million capital injection), educational infrastructure ($10.39 billion), hospital and healthcare infrastructure ($4.65 billion) and prison infrastructure ($698 million). 

President Michelle Bachelet recently introduced a bill to the Chilean legislature calling for the creation of a new national public-private infrastructure corporation with a $9 billion investment capacity.

According to the CChC, however, the plan doesn't go far enough. 

Chile's economy is largely dependent on mining exports, and a significant drop in demand from China, coupled with a drop in copper prices, have made designing contingency plans more urgent. 

With the CChD plan, the group claims GDP could be elevated to roughly 6 percent per year throughout the period, whereas current projections put growth through 2016 at between 1.25 percent and 2.25 percent. That comes after growth clocked at 2.1 percent last year and 1.9 percent in 2014, the latter of which was a five-year low for the economy.